There is not one but there are several ways to invest in real estate. Each way is different and has its advantages and disadvantages, so it is good to read carefully and see which way suits you best.
You should also not stick to one way and can try a few or start somewhere and gradually try other methods.
Table of Contents
1. Investment properties
The Modern way of investing in real estate is doing it yourself: Invest with Lodha Crown Taloja in Apartments & Flats.
How do you make money with an investment property
- Monthly rental income (make sure your expected rent is higher than your monthly expenses)
- Value appreciation (you only get this out in the long term when you sell the property)
Advantages of buying an investment property
- You have full control over what you invest in
- The passive income from rent can be a serious additional monthly amount
- The increase in value and surplus value can later allow you to obtain mortgages to purchase new investment properties.
Disadvantages of buying an investment property
- Need a lot of money: Depending on the mortgage, you will still have to contribute quite a bit of equity
- Little diversification: investing a large amount in one property can be quite risky.
- A lot of effort and time required: finding, buying, maintaining and managing an investment property can take up quite a lot of time and is not without obstacles.
2. Funds / REITs
These are funds that own and operate a whole collection of real estate and this can range from residential real estate such as rental properties and apartment buildings to office spaces, supermarkets and much more. Some of these funds are private and less accessible to invest, also because they often have a higher minimum investment, but many other funds (also called REITs) are publicly traded on the stock exchanges and are very accessible.
How to make money with a REIT
- Dividend payments from the profit the fund makes
- Sell your shares in the fund for a higher value
Benefits of a REIT
- Very accessible: REITs are traded in the same way as stocks
- No effort and work: you don’t have to do anything for it
- Very liquid: you can easily buy and sell your shares when needed
Disadvantages of a REIT
- Little diversification because REITs follow the stock markets quite closely
- No control and transparency: You have no control over what the REIT invests in, little transparency on what you actually own, so you’re not really involved.
- Very hands-off: feels more like investing in stocks
3. Real estate crowdfunding
Crowdfunding brings investors together with developers who want to finance their projects and the investors lend their money to those developers. The platform is often just an intermediary and receives compensation for the payments between investors and developers.
How do you make money with crowdfunding
- In exchange for the loan, you receive periodic interest payments
- In some projects, you can also share in the profits (or losses).
Advantages of crowdfunding
- Democratization: you have access and can often already invest with lower amounts
- You are in control to decide what you want to invest in.
- High promised returns (sometimes even far above 10% per year)
Disadvantages of crowdfunding
- Transparency: The platforms have little responsibility and it is not always clear what your rights are if something goes wrong.
- High Risk: When you invest in real estate projects such as new developments or renovations, the timeline and feasibility of the project can change very often and negatively affect your return. Be vigilant and do your research.
4. Real estate insights to investment
Successfully investing in real estate starts with having a lot of insights. Insights ensure that you see opportunities, that you know what to look out for, what a good investment is and which step is best for you. That is why we have listed a number of insights for you that will help you to invest successfully in real estate.
Contact different lenders
Each lender has a different type of mortgage. See which mortgage best suits your situation. Calculate which mortgage will give you the highest return.
Do you have figures ready
If you have your figures ready, the lender can tell you exactly what is possible for you and what requirements you must meet
Immerse yourself in the leverage effect
With the leverage effect you can make more money by borrowing money.
