When it comes to investing in real estate, the benefits can be really promising and inviting. If you’ve got enough funds, we bet you’ve been tempted to hop into this investment journey as soon as you can.
But investment in real estate is just as risky as it is promising. If you invest in the wrong property, you might lose a lot of your hard-earned money. So, whether you’re looking for investment properties for sale in Australia or anywhere else in the world, you need to do your research first.
For that very reason, we’ve shortlisted the top five safest methods of investing in real estate. These will help you secure your money (or even double it!) for your retirement days.
Rent Out a Room
The safest way to make a real estate investment is to renovate the spare room or storeroom in your house and put it up for rental purposes. In this way, you can earn from your property without selling your property.
Plus, if your tenant lives with you, there’s a high chance they won’t mistreat or damage your property. So, there will be minimal maintenance costs and greater earnings.
Invest in Rental Properties
Rental properties guarantee two types of financial safety:
- Stable income
- Property value appreciation
You’ll receive a sound figure every month. It could serve as a surplus to your current income, and you can begin saving for your retirement already. Plus, the value of the property will continue to increase with time. So, if you plan to sell it after 5-10 years, you’ll not only retrieve the original amount you invested. But you will also acquire additional profits, which could range from 35% to 38% of the original cost. That’s because the annual average appreciation rate for property value is about 3.5 – 3.8 percent.
But note that managing tenants is not easy. Tenants may call too often for the pettiest of matters, damage and mistreat your property, or you may even have trouble getting a tenant if some rumors or fake news spreads about your property.
Consider Real Estate Investment Groups and Trusts
Although we’ve mentioned REIGs (Real estate investment groups) and REITs (Real estate investment trusts) together under this header, you ought to know these two are different from one another.
REIGs refer to a pool of private investors that invest collectively in real estate. They have physical properties. However, REITs follow a crowdfunding mechanism, wherein you don’t own a property. In either case, there’s no property management hassle on your end, which makes it a wise investment in the busy years of youth and adulthood. They are also generally safe since a lot of people come together for the investment.
But the involvement of a lot of people also means reduced profits. The profit gains will be divided amongst the investors, and so will the losses. In this light, REITs and REIGs happen to be one of the safest real estate investment programs. Even so, we recommend educating yourself thoroughly about the passive real estate investing process before proceeding with it. Both these methods have their respective pros and cons.
Try Out Online Real Estate Investment Platforms
You can also invest in real estate online. There are platforms like Prosper, Fundrise, and RealtyMogul that connect borrowers and investors. You can create a paid account on these platforms and lend money to those in need. They’ll pay back the amount with interest. At times, money may be required to buy a property or run a business. It depends.
The good part is that your investments are secure since the platform takes responsibility. Moreover, there are platforms wherein construction companies or investing companies allow you to become a shareholder or a property investor with minimal investments (you can begin with $10!).
Consider House Flipping
House flipping basically refers to buying a property with potential. You buy a property at a low cost, invest in its renovation, and then sell it back in the market with huge profits.
This investment method requires active input from your side. If you’re not careful enough, you might misjudge the repair costs required for the property and invest irrationally. Therefore, we recommend this to people with good knowledge about real estate and stamina to browse and filter the market to look for the best low-value investment opportunities.
The methods given above are the safest means of investing in real estate. If you cannot commit to active input or do not trust your knowledge enough, we recommend hiring a real estate agent to assist with your decisions. Anyone who’s in the field, experiencing hands-on profit and loss with property, can always tell better than people studying real estate in theory.