Today, buying a real estate property is more than just finding a home to live. Although the real estate market has a plethora of gains to offer in its investments, the process of purchasing or owning that property is much more complex than investing in bonds and stocks. Let’s explore some effective ways in which investments can become simpler and more calculated.
As simple as it can get, a person can purchase a property and place it on rent to a tenant. Here the owner is responsible to bear all the required costs, taxes and mortgage of maintaining the property.
In this investment, the landlord charges enough rent to cover up all the earlier mentioned costs. In some cases, the rent may even be charged more to produce a considerable profit. However, charging a rent to cover costs till all the mortgage has been paid off is the most common strategy. After reaching the point where all the mortgage amount has been paid, most of the rent starts to come out as profit.
These groups are small mutual funds companies for rental properties. If you want to own a rental property without getting into the hassle of becoming a landlord, then these investment groups are the best option for you.
A company can become a real estate investment group by buying or constructing a number of apartments or condominiums, and then inviting investors to buy through the company. A single investor can own one or more units, whereas an investment group owns and manages all the units, bear the maintenance costs, advertise available units and interviews the incoming tenants. In return for this management, the company takes a percentage from the monthly rent.
This is a very active side of real estate investment. Real estate traders are entirely different in nature and operation as compared to buy-and-rent landlords. These traders buy a property from the market with the intention of holding it up for a period of three to four months, and then sell it at a profit. This technique is also known as flipping where properties purchased are those which are normally undervalued or lie in a very hot market.
Traders or flippers are very careful when purchasing the property, because flipping strictly involves only considering that property which promises an intrinsic amount of profit. Also that no costs will be incurred for property renovations and improvements. This flipping strategy is a short-term cash investment.