4 Effective Ways to Invest in Real Estate Market

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Almost we all have to do real estate transaction at a certain time of our lives, but many of us find it quite difficult to handle. On the other hand, if you have good budget and interest in real estate sector, then you can get benefit of this lucrative market that is full of opportunities for making an investment and get the best deals available in the market. Actually, real estate beyond just buying home for yourself and your family and here are four different types of investment methods in real estate market.

1. Buy a Property and Become Landlord

Buying a property and renting it out is not a new perception rather it’s being used over centuries. It’s ideal for those who can do renovation on their own and dealing with tenants doesn’t bother them. Rental property is a consistent source of income and you can increase the income by increasing the value of the property i.e. paint the property, add wooden work, improve aesthetic appeal. Buying a property also deducts tax expenses and any losses can offset gains in other investments. Buyers agents in Melbourne can help you find the best properties.

Paying mortgage, taxes, and other maintenance charges is landlord’s responsibility and if he doesn’t charge enough rent, he will endure loss. It’s recommended to buy property in an area where its value increases over the time and the property has future prospects. 

2. Real Estate Investment Groups

Those who want to own a rental property without becoming the landlord then they should go for real estate investment groups. This type of real estate investment is like a mutual fund and rental properties where a company builds multiple sets of apartments and asks investors to buy these apartments through a company. It’s not necessary that only one person buys all apartments, but they are managed by the same company. The term managing include cleaning, maintenance, improvement, and renovation of the property. The company charges a certain amount to tenants for the aforementioned services.

The quality of an investment group isn’t independent rather it depends on the company offering it. Although, its known as a safe way of investment in real estate, but often they are vulnerable to the fees that mutual funds industry have to pay.

3. Real Estate Trading

More commonly, it’s called flippig. The type of investment is perfect for those who have great experience in real estate sector and efficient in valuation and marketing. It’s not wrong to say flipping is a wild side of real estate as they buy property to hold it for a short time period and sale it after two to three months when come across a profitable deal. Most of them don’t invest money in property and sale it as it is, but some of them spend money on renovation and earn a handsome profit through it.

Flippers have to face severe situations when they can’t sell a property on-time and it takes more time to find a good buyer than expected.

4. Real Estate Investment Trusts

In Real Estate Investment Trusts (REITs), a corporation buys a property from investors’ money. It’s similar to another stock market where corporation pays 90% of taxable profit to keep status as REIT. In such situations, the company don’t have to pay corporate tax from the income and it also decides whether or not they have to distribute its tax among dividends. Probably, it’s a more formalized version of a real estate investment that reflects the value of underlying investment. Wall Street is the best example of Real Estate Investment Trusts when you talk about the financial innovation in the real estate sector.

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