Top Ways To Invest In Real Estate
The popularity of real estate investments has significantly increased over the last five decades. Investing in real estate is more than just finding yourself a great house to buy in a nice neighborhood, it is a common investment vehicle that needs to be driven the right way. Today, New Jersey is one of the best states in the U.S. to invest in homes so that’s where you should start looking first.
Although there are plenty of opportunities for making big gains in the real estate market, it is pertinent that you equipped yourself with expert knowledge before you buy or own any of it. Truth is, it is more complicated than investing in bonds and stocks. But do take heart that it won’t be long before you finally find your best way forward. Here are some ways to invest in real estate:
Go for Real Estate Trading
If you have always been inspired by the capabilities of day traders or actually have such skills, the strategy of flipping properties may be the ideal way for you to make a neat profit from investing in real estate. Like other types of investments, you need to avoid these common house flipping mistakes, and profits are definitely yours to gain if you can buy properties in a very hot market or are significantly undervalued, and then sell them after a short period of holding time (between three to four months tops).
Buying a House then Making it a Rental Property
Feel safer if you took fewer risks? Sure, it is definitely a great decision and there are no qualms about the success of this type of venture. If rental properties are something new to you, you just need to know it entails a process of buying a property and renting it out to a sincere tenant. In this case, you are the owner, thus the landlord, so you are in charge of paying for the property’s taxes, mortgage and maintenance costs.
A common strategy is to also charge sufficient rent to cover all of the aforementioned expenditure, wait until the mortgage has been fully paid, and start enjoying when the majority of the rent becomes profit. What’s more, your property may also have appreciated in value over time so it’s pretty much a win-win situation, isn’t it?
Invest in Real Estate Investment Trusts
Also known as REITs, a trust like this is created when a trust or corporation utilizes their investors’ money to operate and purchase income properties. Similar to other stock out there, real estate investment trusts are also bought and sold on major exchanges. When the corporation you have invested in makes profits that are taxable, you get paid via dividends.
Leverage When the Opportunity Rises
If you are a real estate investor, you have a special tool that is not available to stock market investors, which is the ever-important leverage. Let’s say you are ready to buy a stock. In most cases, you are required to pay the full value of the stock when the buy order is placed. Buying on margin is no different and the amount of money that can be borrowed is still less than with real estate.
A majority of traditional mortgages often require 25% down. However, there are many types of mortgages that require as little as 5%. Yes, depending on the property’s location and this is the leverage you need. With this leverage in your grasp, you can pay a fraction of the property’s total value to control its entirety as well as the equity it holds.
Of course, before diving into a real estate investment in New Jersey, it is best to consult an experienced NJ property agent to ensure careful choices are made.