As we continue to see the real estate market continue to move in a positive direction, it is not surprising to learn that more Americans are becoming interested in investing in real estate. While real estate investing seems straightforward, there are a variety of ways to do so. Let’s examine what real estate investing is, and how Americans can do so moving forward.
What Is Real Estate Investing?
According to Fundrise, real estate investing is the purchase, ownership, or sale of land and structures for the ultimate purpose of earning money. In general, the most common ways to make money from real estate are through rent, appreciation of a property over time, or interest from loans with real estate developers. Investing in homes, or residential real estate, is one of the main ways that one can invest, but there are additional options as well.
Ways to Invest In Real Estate
When a person invests in a residential real estate, that means that they are investing in single family homes, townhouses, condos, or multi-family homes. When deciding on investing in real estate, the investor should note that any homes or buildings that contain more than four units are referred to as commercial properties, and would be approached differently.
Commercial real estate is another way to invest in real estate. Commercial properties are sites intended for business purposes. Commercial real estate properties are typically used for offices, retail, and large multi-family properties, or larger apartment buildings. Lastly, there is the option to invest in an industrial real estate, which could include shipping or storage warehouses and factories. The type of investments will depend largely on what the investor is looking to manage, and how much money will be used.
Different Strategies For Real Estate Investing
Once a person decides on what kind of properties they will be investing in, they can further decide on what to do. The most well-known form of residential real estate investing is house-flipping. This is when a person purchases a home with the intention of doing a complete renovation, with the ultimate goal of raising the home’s value. Upon completion of the renovations, the investor can put the house back on the market at a higher price, based on the renovations that were completed.
For anyone who does not want to worry about turning a house around can also invest in buildings, which includes rental properties like apartments. Acting as the property manager, the investor would be in charge of managing the different apartments with proper maintenance. Additionally, this investment would include collecting payments from tenants each month. For those who are looking for a smaller commitment also have the option of offering their home through Airbnb. In this instance, the homeowners can either offer their entire house for rent or can offer a specific space within the home. One advantage of investing in Airbnb is that it does not require the same level of time and commitment as other real estate investments.
Overall, investing in real estate requires a long-term commitment, and should be well thought-out. Before making the final decision on a real estate investment, it is important to have a strong plan in place about the plan of action moving forward.