List Headline Image
Updated by Joanna James on Jun 23, 2019
Headline for 5 Simple Ways to Invest in Real Estate – How to purchase real estate
 REPORT
Joanna James Joanna James
Owner
5 items   1 followers   0 votes   3 views

5 Simple Ways to Invest in Real Estate – How to purchase real estate

While investing in real estate is profitable it's more complex than investing in stocks and bonds as there are many factors you have to consider. Here are 5 simple ways to invest in real estate.

1

Basic Rental Property

Basic Rental properties are one of the oldest landownership practices which involve a person buying a property and renting it out to the tenant(s). The landlord will pay the taxes, mortgages and will bear the cost of maintaining the property. The tenant will be charged a reasonable amount for all the expenses that the landlord incurs. The tenant will also be responsible for paying for the utilities such as electricity, water and internet that they use. The most common strategy that landlords utilize when investing in this type of property is charging a fixed rate. Once the mortgage is paid off most of the rent money collected by the landlord turns in to profit.

2

Real Estate Investment Group

If you want to own a property but can't be bothered looking into the landlord duties then a Real Estate Investment group is the solution that you were looking for. An organization will buy or construct apartments and condos and then let investors purchase them through their organization. An investor can own one or more units and the organization that manages the investment group will take care of maintaining, advertising and selling apartments. The organization will take a cut off the monthly rent as payment for the property management they conduct. This is a common practice followed by investors who purchase apartments in Colombo from Real Estate companies similar to TRI-ZEN.

3

Real Estate Trading

Also referred to as flipping properties, real estate owners buy properties that are undervalued and own them for a short time (usually for a couple of months) in order to sell them for profit when the time is right. This is a technique used by investors who have a knack for sales and have the time to conduct research on the neighbourhood where they purchase the property. It is considered to be one of the eccentric approaches to owning property as it requires a deft touch to know when to buy and sell.

4

Real Estate Investment Trust

Owning real estate has been a trade that has existed since humans were dwelling in caves and chased away intruders who try to invade the space that they are living in. Real Estate Investment Trust (REIT) is how people on Wall Street get a piece of the real estate business. REIT organizations will purchase properties using the money of their investors to sell and trade properties similar to stocks and bonds. Similar to stocks and bonds REITs are sold in bulk. The organization managing the REITs have to pay 90% of their profit as dividends to its investors to retain their status as REIT.

5

Leverage

Excluding REITs, all other real estate investors have one tool that investors in the stocks and bonds market don't have: leverage. While you have to pay the full price when buying a stock option most of the conventional mortgages require a down payment of around 20%. I.e. you have complete control over the property while only paying for a fraction of the property. Obviously, your mortgage will, in the long run, pay the entire value of the property at the time you buy it, but control of the property is all yours the minute you sign the papers.