When it comes to investing, some investors feel more comfortable with tangible real estate rather than numbers on a screen. If you’re looking to diversify your portfolio, real estate may be a good choice.
A real estate investment can bring several unique advantages, such as cash flow and the possibility of appreciation. It’s important to consider that cash flow can be volatile and that the value of a property could change due to many factors.
A popular option for newbies is the buy and hold strategy that involves buying the property in order to generate rental income and potential capital appreciation over time. This is a labour-intensive strategy that requires you to research and evaluate investments. It’s also a fairly unliquid strategy, meaning that you’ll need to find a new investment opportunity after the deal is concluded and the money has been refunded.
Another option to invest in real estate is through REITs, or real estate investment trust. These companies solicit money from shareholders to buy and manage properties such as apartment complexes and office buildings strip malls, strip malls and strip centers for both rental incomes as well as long-term appreciation. REITs, unlike individual real estate investments are traded on the stock exchanges. They offer diversification to your portfolio, separating stocks from bonds.
One last way to start your journey into real estate investing is to become the landlord yourself. You can do this by renting traditional properties or by using the latest business apps and brokerages that permit you to buy a small part of a property. This is usually less expensive than purchasing a house and allows you to make a distinction between the desire to have an asset that is tangible within your portfolio while maintaining the degree of separation you desire.