When it comes to investing certain investors are more comfortable with tangible real estate than numbers on a screen. If you’re looking to diversify your portfolio, real estate may be a viable option.
Real estate investment has distinct advantages like cash flow and the potential for appreciation. It is important to keep in mind that cash flow fluctuations can be substantially and the value of a home can increase or decrease due to a number of factors.
The buy and hold strategy is a popular one for beginners. It involves purchasing a property in order to earn rental income and potential capital appreciation. This is a labour-intensive strategy that requires you to research and evaluate potential investment opportunities. It’s also relatively illiquid that means that after the deal is concluded and your money is refunded it is time to find another opportunity to invest in.
Another way to invest in real estate is by investing in a REIT, or real estate investment trust. These companies collect funds from shareholders to buy and manage properties such as office buildings, apartment complexes and strip malls for both rent income and long-term appreciation. REITs unlike individual real estate investments are traded on the stock exchanges. They can diversify your portfolio, separating stocks from bonds.
One final way to begin your journey into real property investing is to become a landlord yourself. You can rent traditional properties or by using the latest business apps and brokerages which allow you to buy a small part of a property. This is typically easier than becoming a home-owner and allows you to balance your desire for physical assets in your portfolio with the level of separation you’d like from your investment choices.
