Real Estate Investment: Key Opportunities for Investors
People have realised the true potential of real estate in recent years, and have started counting it as a safe investment option. This is especially true if you are ready to stay invested for a long period of time. On the other hand, there are many people who think real estate is not for aggressive investors because you will have to wait for more than a decade at times to get substantial returns. Let’s see if this is always true.
Is buying and reselling the property the only way out to earn big in real estate? Well, the answer is no. There are several other key real estate investment opportunities that you might not know of! In fact, there are avenues that give you the opportunity to enjoy regular and quick returns as well.
To help you identify the best one for you, we have curated a list of some of the top real estate avenues in which you can invest your money.
Different ways to invest in real estate
Renting a property is one of the most popular ways to make money out of your real estate investments. You can buy a property in an area that commands high rents, enabling you to earn good returns on a regular basis. However, note that you need a good lump sum amount ready for this. Also, make sure that the rent you get is higher than the expenses for mortgage and maintenance charges.
One thing to keep in mind is that you will have to invest your time and energy in managing tenants and the related paperwork. Nonetheless, with the right kind of rent, that should not be a huge problem.
Real Estate Investment Groups (REIGs)
If you are looking for an option where you can own a rental estate but do not have to worry about managing it, then REIGs can turn out to be a great option for you. To put it simply, it is like mutual funds in the world of real estate. A company builds a group of self-sustained apartments, in which you can invest by buying one or more properties through the company.
As a result, you join the group of owners and earn rent on your property, without having to worry about hassles related to managing the asset. Instead, the company will do the job for you in return for fees. If your property does not remain vacant for too long, this can turn out to be a safe and hassle-free investment.
Real Estate Investment Trusts (REITs) or ETFs
Here is something that not many people are aware of when it comes to real estate investments. You can actually have investments that offer liquidity, even in the real estate market. This is achieved through REITs. When a company uses a bunch of investors’ money to buy and manage income properties, a REIT is created. Just like stocks, REITs too are sold on all the major exchanges around the world.
Since REITs are technically ETFs (Exchange Traded Funds), you can withdraw your investments when you want. You won’t need a realtor or title exchange or go through any of the hassle, which is usually associated with the selling process of real estate.
For a corporation to maintain its REIT status, it will have to sell out 90% of taxable profits in the shape of dividends. As a result, it does not have to pay corporate income tax as well, which helps you get better returns. While investing in REITs, you can either opt for an equity REIT or mortgage REITs. While the former is more popular because it offers ownership of the company, the latter focuses on mortgage financing to earn you returns.
If you have great knowledge about market trends, then house flipping is one way to make quick returns in the world of real estate. Here, the idea is to buy and sell properties in a matter of months. You do not have to keep the capital investment locked in for a long time, as you just need to make sure that you find the right buyer quickly and sell it for a considerable profit.
You can do this in two ways. You can buy either well-maintained properties and sell them quickly or buy slightly older properties, renovate them and then sell them. The second option will take a longer time for you to enjoy the returns. If you choose the former option, make sure that you know the market trends and are capable enough to sell the property quickly.
Online real estate platforms
If you do not have a big enough capital to buy a property on your own, you can opt for online real estate platforms that sell properties to a pool of investors. Another term used for such kinds of investments is real estate crowdfunding. Yes, you still need a substantial amount for this but not as much as regular real estate investments. Moreover, you can buy commercial properties as well through this medium, and this has the potential to give you higher returns.
How to choose between commercial and residential properties for you to invest in?
When it comes to investing in real estate, you can either invest in commercial properties or residential ones. If you have the means to come up with a large investment capital, then you should be open to investing in commercial properties like malls, lodges, hotels, hostels, and more. All these properties have the potential to give you higher and quicker returns than residential properties.
On the other hand, if you do not have a big budget, you should invest in residential properties. Of course, you can still enjoy immediate returns with this. You can rent or lease such properties to earn monthly returns. Moreover, it is a slightly safer bet because market fluctuations will have less of an impact in this case.
Emerging Hotspots in India that will give you good returns for your real estate investments
- Ideal for long-term investments - In India, eastern parts of the country like the states of Jharkhand and Odisha are slowly seeing a surge in real estate prices. This is due to new industries and workspaces coming up here, which has made these parts of the country more appealing to non-locals as well. As a result, the real estate market is slowly seeing a boom here, which makes it ideal for long-term investments. In less than a decade, you should be able to enjoy good returns for your investments in such areas.
- Ideal for short-term investment returns – If you are looking to enjoy good returns in less than 5 years, then cities like Pune, Kochi, Ahmedabad, Lucknow, and Chandigarh are the best hotspots in the country. All these cities are well-connected with the outside world, and have a bunch of industries already. The economy and the living standards are good too. As a result, the real estate prices are high, enabling you to enjoy high returns.
In conclusion, if you are to enjoy good returns by investing in real estate, then you need to have a good amount of capital in most cases. Apart from that, you should ideally invest in prime locations to earn maximum benefits after a certain period of time. Finally, since these are long-term investments in general, you should be open to the idea of renting the property to earn regular monthly returns before selling it to get a lump sum amount.