Rental property investment can provide robust long-term returns. These returns are not entirely correlated with the stock market. However, costs and risks can run high if you invest in physical properties. This makes real estate investment trusts the best choice if you have limited resources to invest.
If you decide to buy rental properties or flip homes, you must ensure that you are fully aware of the risks that come with what you’ve taken on. You must also have a plan on how to get back your investments.
Note that the real estate sector can be very illiquid in the short term. This means that investments in this sector can be a big financial commitment. If you want to get into real estate but are having doubts, you can talk to a financial advisor to show you the way.
Techvestor’s financial experts will even help you manage your money, enabling you to get $250k annual wealth created per property. According to the National Financial Education Council, failure to have financial knowledge causes an American at least $1200 a year. These are costs that you can avoid by seeking the help of a financial expert.
Investments That Bring Short-Term Gains
There are multiple ways of investing in real estate. From taking out a mortgage to building properties. The latter may probably be out of reach for a lot of people. However, there is no shortage of other options. Keep reading to find out about them.
- Index Funds
Index funds are examples of stock investments where your investment gets diversified across multiple stocks.
Index funds are passively managed. They aren’t directly overseen by a money manager. Due to this, there are fewer fees involved. This means that an investor has the potential of receiving slightly higher returns. The returns will, however, be dependent on how well the index your fund is tracking does.
Considering that major indexes often track the overall movement of the market, they tend to perform almost as well as the overall market in the long term.
Investing in index funds is like betting your money on the future of the United States. You will probably come out okay if you’re confident that the American economy will keep growing.
- Fixed-Income Funds
This investment option provides a relatively stable way of receiving a greater return than the one offered through savings.
Fixed-income funds include bonds and other securities. Note that this investment does not offer much in terms of gains. But they are designed to reduce risks and limit losses in a down market. As a result, investors are able to make good short-term investments.
You shouldn’t be deceived that you need to save up thousands of dollars to invest in a fixed-income fund. Rather than pack money in a savings account, just put it in investments. This will help you to improve the overall returns.
These are some of the newest types of investments for business people. Cryptocurrencies are unregulated digital currencies that are bought and sold on crypto websites.
Cryptos like bitcoin and Dogecoin have gained a lot of interest over the past few years as investment vehicles. This has been attributed to their quick and dramatic growth.
Just like you’re able to exchange U.S dollars for any other currency, you can also exchange your U.S dollars for cryptocurrency.
Technically, cryptos aren’t part of the forex market. But the mechanisms of investing in them are very similar. The hope that crypto investors have is that their value against the dollar goes up and that they’re relatively simple to buy online.
If a person invested in bitcoin in 2017, for instance, and decides to sell it today, they will make incredible profits. The only challenge with investments in cryptocurrency is that there is no way to time the market. Cryptocurrencies like bitcoins continue to dramatically increase or significantly drop in prices.
- Real Estate Mutual Funds
Real estate mutual funds primarily invest in REITs and real estate. They give investors the ability to gain diversified exposure to real estate with small capital.
Depending on your strategy and diversification goals, you will be given a much broader asset selection, compared to if you invested via REITs.
Like REITs, real estate mutual funds are pretty liquid. Another benefit is the analytical and research information that is offered by the fund. The information can include details on acquired assets and the management’s perspective on the viability and performance of investments.
If you’re a more speculative investor, you can go for a family of real estate mutual funds, tactically overweighting certain types of property to maximize returns.
- Real Estate Limited Partnerships
A real estate limited partnership is like a real estate investment group. RELP is an entity formed to buy and hold a portfolio of properties. You must, however, note that RELPs exist for a finite number of days.
Real estate development firms serve as the general partner. They sought outside investors who provide financing for a real estate project in exchange for a share of ownership as limited partners. Partners receive periodic distributions from the income generated by RELPs properties. The real payout in this investment comes when the properties get sold at a sizable profit.
- Invest in Real Estate By Flipping Properties
You don’t have to purchase rental properties to increase your profits in real estate. Buying and flipping properties is a common strategy. Although like rental properties, flipping takes a lot of work.
Flipping means renovating homes and knowing how to identify up-and-coming neighborhoods that will enable you to sell your purchase at a premium. If your flipping strategy requires renovations and construction, it means taking on extra risk and high out-of-pocket costs.
To reduce the efforts in flipping properties, go for homes that don’t require major innovations in up-and-coming areas. This strategy can be more lucrative if you rent the property while waiting for home values to rise.
But you must also know that the neighborhood you’re thinking will become trendy may never catch on. This can leave you with a property that will never give you a return on investment.
Like all investment decisions, the best real estate investments are the ones that will help you meet your goals.
Thus, you must think of how much time you have and how much money you’re willing to invest. You must also think of whether you will be partnering with a real estate finance expert or whether you have enough knowledge to handle everything on your own.