Pandemic or no pandemic, real estate investment is a viable option for diversifying your financial portfolio. For starters, real estate value has been on a steady rise over the years.
Amid the pandemic, the downturn in the market has triggered developers to offer better payment termsand options, if only to attract more investors. This is something you can maximize if you already have sufficient funds for a down payment or to pay in full. But first things first, you need to get acquainted with the real estate investment options at your disposal. Here is a list for your reference.
- Residential real estate
This is arguably one of the most well-known types of real estate properties. Residential is most suited to individuals looking to purchase their first home or buyers in the market for a second home. This is also an excellent option for entrepreneurial-minded people who want to join the rental property business.
There are two ways to go about this investment. You can invest and hold on to the property and call it home. Should you decide to sell in the future, you can expect that your property has, by then, appreciated. Or, you can use the property as a source of passive income by renting it out.
Another noteworthy opportunity is house-flipping. You can look for residential properties to improve. A fixer-upper can earn you significant money if you get the hang of how house-flipping is done.
- Commercial real estate
Commercial real estate includes office buildings, retail outlets, and warehouses, among others.
The main advantage of this real estate investment opportunity is the higher returns it yields compared to a residential property.
The catch is you will require managerial expertise. You’ll be responsible for your tenants and the public at large. You need to keep abreast of standards and compliance measures issued by the government. For example, you might be legally liable for any accident that transpires within the premises of your commercial property. That means you need to be hands-on with building maintenance and repair.
Commercial property is most suited to experienced real estate investors. If you own a couple of residential properties you rent out, you are probably ready to level up to this type of investment.
- Raw land
The term raw land refers to a real estate property with nothing in it—no house, no roads, no vegetation, or anything else. This is a clever way to expand your financial portfolio because purchasing raw land can be cheaper. And just like a residential or commercial property, its value appreciates over time. Plus, this investment option requires little to no maintenance.
You can rent out raw land to a businessperson looking for a place to put up a gasoline station. Or, if you have raw land on a beachside, you can lease the property out to a resort developer. Just make sure the terms of the contract will work in your favor.
- Real estate trust investments (REITs)
REITs are companies operating as trusts. They manage real estate investments, primarily commercial properties. These investments are open to investors to share. In return, you earn from whatever profits those investments yield, based on the terms of your purchase contract. Consider REITs as a passive investment. You do not own a property per se; you are basically the owner of stocks in a property firm.
Compared to the previous types of real estate investment, REITs don’t require you to invest a huge sum of money, so do not expect to reap gargantuan income, too.
- Real estate crowdfunding
This is another opportunity for people who are earnest in participating in the real estate industry but lack sufficient funds. Here, you partner with other investors, typically crowdsourced online. You pool your resources together to purchase a property that is otherwise off-limits to you due to lack of capital.
You receive dividends for the income yielded by your crowdsourced real estate property. That’s a smart way to diversify your current financial portfolio without requiring you to put a large sum of your savings in one investment. The whole process is completed online. Not much effort is required on your end.
An Investment for Everyone
It’s understandable for people to be cautious about investing in real estate during the pandemic. There is that fear about market fluctuation amid what many perceive as a precarious economic landscape. However, that notion is somehow misguided. In fact, if you were to look into luxury real estate trends, you would see that the market is not slowing down. Supply and demand are as robust as ever.
If you are considering diversifying your financial portfolio, it’s high time you put real estate investment on top of your priorities. Rest assured that you are placing your bet on the right horse that is more than ready to run a winning race.