Real Estate Investment: How does it work?

The housing market has also been an interesting industry to invest in for both individuals as well real estate investment groups. While you might immediately think of property management as a landlord when you hear the phrase ‘real estate investment’, there are actually various different investment set-ups that you could consider. Read on to find out more.

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Rental Properties

Becoming a landlord could be a very easy method to invest in real estate. Buy property in an area where you know it will be easy to find tenants and manage the property. While you will be responsible for the mortgage, taxes and upkeep, the tenants will live in the property and cover all charges and related costs. This allows you to buy into an area where you might eventually want to move to or where property prices have been on the rise, meaning your investment becomes more valuable over time.

While this could be a first step up the real estate investment ladder, there could be downsides if you run into a bad tenant or struggle to find a tenant. Managing a rental property can also be very time consuming.

REITs

REITs, also real estate investment trusts, are where an organisation or corporation uses money from investors to acquire income properties. REITS function like stock on the market, and thus are bought and sold on the major exchange. This is a popular set-up amongst investors as it offers regular income and REITs avoid paying corporate income tax. As a corporation it is vital to be fully up-to-date on the requirements to keep its status as a REIT and employ the services of a dedicated real estate industry law firm like Goodwin to make the most of every investment decision. REITs also allow investors to buy into non-residential property investments, like office building or even malls.

Real Estate Focused Company

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You can also invest in corporations that do not operate as a REIT. They may pay a lower dividend, but this can include a host of different investment options. There are various companies that are real-estate focused for which you can buy stock, such as hotels, commercial real estate developers or timeshare companies. This type of invest will require a little more personal due diligence to ensure you are choosing the right company to invest in by researching data, history and more. However, this is ideal if you are looking to invest into a specific type of real estate and property.

Real estate investments can be infinitely more complicated, but whatever type you settle on is fully dependent on your means and wanted outcome. There is a setup right for you. Click here for more information on other investment types.

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