One of the investment sectors that you can never go wrong is real estate.
The sector has grown over time. This article will show you how to invest in
real estate.
Thinking of real estate, the first thing in
your mind is a home. Yet, there are other several options in real estate apart
from home. It is good to know where to invest in real estate.
As per KNBS, the sector has contributed
to about 3.3% of the country’s GDP in the past two decades. Although
real estate is a lucrative business, it can be intimidating. This is because it
is capital intensive and exists in a very dynamic market.
There are many ways one can invest
in real estate. Here are some of the ways in which one can invest in this
industry;
· Real
Estate Investment Trusts (REITs)
If you are looking to invest in real estate
with little money, REITs is the way to go. REITs use potential
investors money to purchase and operate income properties.
This method works as a pool of capital from
different investors. It generates a steady income stream but little in
appreciation. For ease of understanding, public companies buy and lease out
real estate assets. Example of these assets is shopping malls, office
buildings, apartments etc.
REITs thus pay all their after tax profits to
their investors as dividends.
REITs helps reduce the worry of owning real
estate. The management handles all the activities and procedures involved. You
relax and collect dividends. One can buy and sell REITs through brokerage
account, like other public companies.
Beginners in real estate industry can invest
in REITs as it requires less amounts of capital. It is the most liquid real
estate investment available.
· Invest
in Your Own Home
The most primary way to invest in real estate
is to invest in your own home. You can do this by taking a mortgage, making
monthly payments and owning the house after some time. Investing in your own
home helps you create wealth in the long term.
Also, you can invest in house flipping.
Either way you would have invested in your own home. House flipping is one of
the best strategies that are suitable in real
estate investment. House flipping is the process of buying, rehabbing and
selling the property for a profit. It requires significant experience in real
estate valuation, marketing and renovation.
· Invest
in Real Estate Using Online Platform
Technology has contributed much to almost all
industries. Real estate is not an exception. There are platforms that allows
investors interact with real estate developers.
In Kenya platforms such as CapitaLand East Africa Ltd provides
such an interaction. The developer lists their proposed project, the required
funding and estimated returns. The investors can weigh from the website if it
is a viable project or not. If viable, they invest.
This is a great way to start real estate investment
especially if you have a great project with no funds.
· Consider
Investing in Rental Properties
Rental properties attract individuals who
have the patience to deal with tenants. This offers opportunities to real
estate have regular incomes and properties can appreciate. Rental properties maximize
capital through leverage.
Although investing in rental properties can
be exciting, managing tenants can be tedious. The downsides of rental
properties also involve a lot of cash up front. That is from down payment to
maintenance.
The real estate investor has to determine
whether the investment is worth or not. You will also need to screen tenants
before letting them in.
Rental real estate investment is a great way
to secure monthly income. Many investors may refer to this as having a passive
income, it is always a great way to secure income stream.
You can also hire a property manager if you
do not want to deal with tenants. Property management is an opportunity in real
estate industry.
Bottom line,
With so many decisions on how to invest
in real estate, the best decisions are those that work best for you. As
an investor, think about your time. Think about the capital you are willing to
invest. Such factors help determine how you are going to invest in real estate.
