There are many ways you can invest in real estate, including wholesaling real estate, flipping houses, and purchasing shares of a real estate limited liability company (LLC) or limited partnership (LP).
For investors looking for a balanced blend of reward and risk in their portfolios, there are some strategies you can use. Read on to learn more about how to start investing in real estate!
Purchase a Primary Residence
Instead of having to give rent to a landlord every month, many people save for a down payment to buy a primary residence so they can live in it. Historically, property prices usually increase over time, making equity for the homeowner. The value of a regular middle-tier home has almost doubled in less than 10 years. So, the typical home that was purchased for $187,000 in 2011 would now be worth about $356,000, if the property was well maintained.
Single Rental Family Homes
Another common strategy for investing in real estate is to buy a single-family rental home. The right SFR can offer everything you are looking for: appreciation in property value in the long term, recurring rental income, and tax benefits for real estate investors. It was found that vacant-to-occupied rent growth has accelerated by 12.7% in the past year. The rent growth for property has averaged 8.1% since May 2020 as compared to a previous average of 3.3%. The single-family rental homes have occupancy rates of 95.3%, which is a new record in many years.
REITs and ETFs
Real estate investment trusts (REITs) are companies that own, purchase, and operate different types of real estate, such as student housing, commercial property, residential rental homes, and special purpose real estate like the cell phone towers. For example, Roofstock One is a private placement REIT that offers tracking stock linked to SFR portfolios for investors. The shares of REITs that are publicly traded can be sold and bought online, just like any other stocks. One of the best aprts about investing in a REIT is that they have to pay 90% of their income as dividends to their investors. The residential REITs give out an average dividend yield of 2.51% and also the total year-to-date return is at 36.29%. Meanwhile, real estate exchange-traded funds (ETFs) manage baskets of securities that are found in the real estate sector.
Crowdfunds for Real Estate
Real estate crowdfunding platforms give investors a way to invest small amounts of capital in large real estate projects. These can include apartment buildings, office properties, single-family rental home developments, and shopping centers. But unlike the publicly traded REITs, money that is invested in a crowdfund can be locked in for many years. Crowdfund shares are not liquid and are difficult to trade.
Grow Your Real Estate Business with InstaLend
InstaLend gives you access to capital at lower rates and within a shorter time. We offer you single family rental loans, new construction loans and more. We always serve as reliable capital partners so you can trust us. Feel free to contact us to find out more.