Real estate helped an overwhelming number of the world’s wealthiest people create their wealth. Everybody needs a place to live, and that makes homes and the property they stand on an extremely valuable asset. The thing is, there are a lot more ways to think about how to create wealth from investing in real estate than many people are aware of.
There are real estate investing opportunities right under your nose that could make you money if you had the correct information and went about it with the right strategy.
With so many ways to learn how to create wealth investing in real estate properties, it would take a book-length project to dive deep into them all. Instead, we’ll give you a glimpse into some of the best ways to get into real estate investment.
Consider investing in the commercial market
While the residential market takes a lot of attention with TV shows flaunting professional house flippers, the commercial market is hardly promoted but can be very profitable. Getting your hands on suitable property for commercial businesses to occupy can be an easy route to regular income through these businesses’ rental payments.
Even small towns have highly desirable commercial real estate as each town has its own local economy and often a need for more businesses. The tricky part is in finding the right tenants. You can have a great location, but if you don’t have somebody renting the property that knows how to run a business profitably, they won’t be able to pay your rent.
You might be able to get away with having businesses struggle on your property for some time, but the best route to success and ease of mind is through a business on your property that you know will make rent month to month.
Examine how to create wealth investing in real estate investment trusts (REITs)
REITs are as close to truly passive income as real estate gets. Many people think of buying properties and renting them out as the best form of passive income, but there is still a lot of work to be done in managing those properties.
REITs are simply shares in an investment trust that give you a chance to own a piece of property without being directly involved in it. With REITs you’ll invest in a portfolio of properties you will never see.
While REITs’ detached nature can make them attractive, there is still a lot to learn to make REIT investing a profitable strategy. If you know what you’re doing, there is definitely profit to make. REITs are some of the most profitable and steady stocks on the market historically.
Just like with working with physical properties, there are many choices when looking to invest in REITs. Residential, commercial, office, and farmland REITs are just the tip of the iceberg. Make sure you understand the market you’re getting into when buying REITs. They can be a great source of passive investment, but only if you do the work to learn about them ahead of time.
Consider investing in real estate in up-and-coming areas
As mentioned, rehabilitating properties is a popular strategy for real estate investing. Cities and towns often love real estate investors because they revitalize the area with improvements and updates. This is also an excellent way to think about where you are looking for your real estate investment opportunities.
The best towns may have some homes that can be updated, but the cost of getting into these properties can be high, and that increases your risk. Working in towns and cities that are developing gives you a chance to find places at a lower price point that will gain value as the property around it improves. One place to start is your local city or county’s assessor and permitting office, finding new, planned developments can be a sign that a location is popular and growing.
This can be an intelligent way to invest with flipping, renting, or wholesaling. The location of a property is more than just the land it stands on; it’s also about the town it’s in. Finding the right town to work in can be as important as anything else.
What real estate investment strategy are you thinking about using? Why?
Nancy Zambell has spent 30 years educating and helping individual investors navigate the minefields of the financial industry. As a lecturer and educator, Nancy has led seminars for individual investors at the National Association of Investors, Investment Expo and the Money Show. She has also taught finance, economics and banking at the college level, and has been quoted extensively in The Wall Street Journal, Investor’s Business Daily, USA Today, and BusinessWeek. Now let her give you the tools and resources, including a monthly magazine, for gaining the peace-of-mind to live comfortably now and in retirement in her Cabot Money Club.Learn More >>
*This post has been updated from a version originally published in 2020.