If you’re looking for the secret to great wealth, it just makes sense to look at the wallets of those who’ve gone before you. What can you learn from the wealthiest people? What do the wealthiest people have in common with one another? A look at their balance sheets reveals that a good chunk of their investments are in real estate. In 2016, commodities lingered at low-prices forcing high-net individuals to park their money somewhere else. That somewhere else was real estate, because real estate does well in upward markets and is a safe place to wait out market corrections.
At one time, real estate investments were only for the wealthy, but thanks to dramatic changes over the last few decades, there are plenty of ways that middle class individuals can invest in real estate without the hassle of being a landlord.
Here are a few tips–learned by watching what the wealthy do with their nest eggs–for making money by investing in real estate.
While most people think investing in real estate requires buying property, you can become an investor without house shopping and comparing housing market trends. Peer-to-peer lending, also called P2P, allows individuals to use digital crowdsourcing to invest in individuals and reap the rewards of being a lender. This means you can help fund someone’s mortgage and earn much more interest than you’d receive parking your savings in a bank. By the way, when you park your money in a bank, the bank uses it to give out loans. When interest is paid, you receive a small cut. P2P products allow you to take a larger portion, which would typically go to the bank.
In its infancy, P2P lending was risky, but today, most P2P loans are for large amounts to borrowers with excellent credit.
Real Estate Investment Trusts
Real estate investment trusts, or REITs, allow individuals to buy shares in real estate projects. It’s similar to the way investors can buy mutual funds or stocks. You can purchase REITs in a wide variety of real estate projects. Some REITs concentrate on income producing residential rental properties or commercial buildings like offices and strip malls.
Before parking your money in a REIT, you should carefully examine how the trust is set up. Most earn money based on cash flow and profits from selling the projects. This is a way to play in the real estate game without having to find renters and collect rent checks.
The easiest way to invest in real estate is to buy physical property. This is a time-consuming effort. You’ll need to find a great real estate agent who can be on the lookout for properties that are or can easily become income producing. Many investors choose to flip homes or to own rental properties. Though these are reliable ways to make money in real estate, you’ll need to be patient waiting for the right residential real estate in Toronto, Ontario, to be available. A lot of investors fail to do their due diligence, so it’s critical you take your time in making an investment purchase. Real estate–when held over time–is almost always a wise place to park your money.