Ways of Effectively Investing in Real Estate

Practically everyone has shown an interest in investing in real estate over the last decade. Before the economic crash and housing market collapse hit, many people were in some way involved in doing it, as well. But in any kind of market, there are smarter means of investing in real estate. This article discusses four of the ways that the average person might effectively invest in real estate, regardless of whether or not the market currently lies at its final bottom.


Becoming a Long Term Landlord

Anyone who engages in the time tested "buy low and hold long term" strategy on real estate can hardly lose. In such a way, an investor can build up a number of rental properties over a period of time. The key to making this a successful strategy lies in both obtaining properties at very favorable prices and mortgage terms, as well as in securing and keeping good tenants. So long as the monthly rent coming in is consistently greater than the mortgage, taxes, and upkeep payments on the properties in question, the investor will make money. Many investors have grown wealthy slowly using this effective real estate investing method.


Buying Real Estate and Engaging Property Management to Oversee It

Many individuals may find the idea of acquiring properties to rent out appealing, but still not be comfortable with the sometimes trying and often time consuming concept of finding and dealing with tenants. There are many issues involved in personally handling the management of one or more properties. Having the convenience and peace of mind in knowing that professional property management will both screen for and pick out tenants, collect the monthly rents, handle and arrange any needed repairs, and take care of property maintenance and other tenant issues is attractive. This option will cost anywhere from seven to ten percent of the collected amount of monthly rent, but it can be worth its weight in gold.


REIT Investing

Those who feel like owning their own home is sufficient exposure to the residential property market may be interested in a vehicle that permits them to become involved in the commercial real estate property market as well. REIT's, or Real Estate Investment Trusts, are such an ideal means of accomplishing this. These investments are purchased like stock shares, making them easy to sell in a hurry, and they also yield investment dividends. If they do well, the price level appreciates on top of this, offering the investor a second means of making money. REIT's may be purchased through particular company stocks, or via Exchange Traded Funds, or even Mutual Funds.


Flipping Properties through Buying and Selling Them

This is a means of potentially making, or in worst cases losing, a great amount of money fairly quickly. The goal is simply to buy low and re-sell high. It sounds easy enough, but it typically involves performing some renovations or making other improvements to the property in between the buying and selling periods. The key in making this means of investing in real estate effective lies in securing a very good deal on the purchase price, keeping a tight rein on the costs of refurbishment, and then finding a willing buyer to sell the property to without too much time lost in delays.