Some investors prefer investing in tangible real estate, rather than numbers on a computer screen. So, if you’re considering diversifying your portfolio with a little real estate, it could be worthwhile to learn more about this option.
Real estate investing offers some unique benefits, including cash flow and the potential for appreciation. It’s important to remember that cash flow can be volatile and that the value of a property could fluctuate due to a variety of factors.
The buy and hold strategy is an extremely popular option for novices. It involves buying the property to generate rental income, as well as potential capital appreciation. This strategy is labor-intensive and requires you to meticulously research and vet potential investment opportunities. It’s also relatively illiquid so once the deal is concluded and your money has been returned it is time to find another opportunity to invest in.
Another way to invest in real estate is by investing in REIT, also known as a real estate investment trust. These companies solicit money from shareholders to purchase and manage properties like office buildings, apartment complexes, strip malls and strip centres for both rental incomes and long-term appreciation. REITs, unlike individual real estate investment funds, are traded publicly. They provide diversification in your portfolio, separating stocks from bonds.
You can also enter real estate investing by becoming your own landlord. You can do this by renting traditional properties or by using modern business apps and brokerages which allow you to purchase a part of a property. This approach is often easier than becoming a homeowner and allows you to balance your desire for an asset that is physically located in your portfolio while maintaining the level of detachment that you want from your investment choices.
