Home » How to Invest in Real Estate

How to Invest in Real Estate

miniature house on top of stack of coins

Investing in real estate is an exciting prospect; doubly so given the potential return on investments. Real estate appeals to investors because it offers a lot of choices. Unlike stocks and bonds, which can only be bought and sold, a property can be renovated, rented out, lived in, and sold. There are lots of ways to get involved with Gulfport MS real estate investment and manage those investments.

  1. Become a Landlord

    Being a landlord isn’t the easiest job in the world. It takes some time, patience, and a little bit of DIY skills. It does offer a good return on investment for property owners though. With rental property, investors are guaranteed to have some kind of income as long as the property isn’t vacant. While there are some costs associated with being a landlord, many of these can be written off at tax time.

    There is an obvious downside to being a landlord; having to deal with tenants. They can be more trouble than they are worth at times. Vacancy is another major issue. A rental property only makes money if someone is living in it and paying rent. Landlords may find themselves forced to reduce rent to account for expenses during downtimes in the market.

  2. Join a Real Estate Investment Group

    A real estate investment group is a good idea for an investor who wants to own property but not have to deal with the responsibilities of property ownership. These groups provide a hands-off approach that still allows an investor to get income from a property as the property itself appreciates in value.

    A real estate investment group can be considered to be the real estate version of a mutual fund. Several people come together to invest in a fund that purchases apartment blocks and condos. It is up to the investor how many residential or commercial spaces they want, but the group itself manages the properties and takes care of them. They are in charge of running adverts, interviewing tenants, maintaining properties, and more. They will take a share of the rental income in order to cover those expenses and be paid for their efforts.

    An investment group offers what could theoretically be considered a safe way to invest in real estate. They aren’t entirely secure though. Much like any aspect of the mutual fund industry, there’s always the risk of fees and other problems. Not to mention the potential that a group is just a scam. Investors should discuss their options with a Realtor® in Gulfport MS and get their recommendations on good investment groups to join.

  3. Become a House Flipper

    The golden rule of the stock market is “buy low, sell high”. House flippers are people who apply that logic to real estate. They have a lot of experience with valuing properties and the overall real estate market. They can tell when a property has been undervalued and have the experience to sell it at a higher price with real estate agents Gulfport MS.

    These “real estate traders” as they are also known will buy property and sell it fast, often within a matter of months. They don’t aim to improve the property. They just buy something that already has intrinsic value and then sell it for a profit.

    The term “house flipper” has also been used in recent years to apply to people who purchase property and then renovate it. They find fixer-uppers and put in the work to increase their value. This is a long-term investment that takes a lot of time and effort, but can pay off in the long run.

  4. Join a Real Estate Investment Trust

    A real estate investment trust (REIT) is a good choice for investors who want to have real estate in their investment portfolio without having to go through the process of actually purchasing or selling property. They are closer to stocks than anything else with people investing in property and getting returns in the form of dividends.

    These REITs are formed when a corporation/trust uses money from investors to purchase and manage property. The properties are bought and sold on exchanges like a stock. Corporations have to pay 90% of taxable profits as dividends in order to maintain their status as an REIT, allowing them to avoid corporation tax.

    An REIT allows someone to invest in properties like office buildings and malls. Investing in something so large would be impossible for an individual investor. These are great for stock investors who are curious about the real estate market.

Closing Thoughts

Real estate investment of any kind comes with a good chance to make a return on investment. With that said, investors should keep in mind that the value of property – much like any investment – can go down as well as up.