7 ways you can invest in real estate
The real estate market is moving again and it is therefore a good time to step into it. Because the market is so broad, we have made an overview for you of different ways you can invest in real estate.
Way 1 Buying up, refurbishing and reselling existing homes
A common way used by mainly start-up property investors is to buy up dilapidated houses far below market value. Then have them refurbished so well and then sell them to people who want to live in the house. By working this way you can sell the house for market value. So the difference between the purchase price plus renovation costs and the selling price is the profit to be made. This profit can be high. However, here is the risk that the house could be for sale for a very long time if no buyer is found. The longer the house is for sale, the less it will be worth to the investor. In this way, the selling time is a very important factor.
Manner 2 Houses Outstanding
In this way a house is bought with the intention of letting it. After a number of years the intention is to sell the house to the tenant. Investors are therefore looking for homes that are attractive to tenants who ultimately want to stay in the home. By outsourcing homes, the investor can count on monthly cash flow and after a number of years enjoy a home sale at market value. It is therefore important here to find a reliable tenant, and to make the housing so attractive that the tenant would like to buy it.
Way 3 Developing new homes
By developing new houses you invest in the new building. You can only enjoy income once the houses have been completed. You can then sell them with high profits. Because you have only paid for the development costs. Nevertheless, this form of investment involves risks. It often takes a long time before a property is ready, often it requires a large budget, and it may also be the case that no buyers are found. This is a very risky way of investing as a starter. Because you have no idea if there will be unforeseeable costs and if there are actually buyers for the project. This form of investing is more for people with more experience.
Way 4: Buying commercial real estate
I'm sure you will not have missed the vacancy problem that many commercial properties have to deal with. As a result, many office buildings are vacant and owners are quickly looking for new investors who want to invest in them. The advantage of this way of investing is that you can buy such properties with large discounts. The disadvantage is that you have to invest a lot to change the building and give it a new concept. Now we see the trend that many buildings are being transformed into hotels, student complexes or flexible workplaces. In order to start this transformation you need to have a reasonable good knowledge of real estate and sufficient capital. This way of investing in real estate is therefore not ideal for starting investors.
Way 5: Buying Real Estate Bonds
If you want to invest in real estate but do not have the capital to buy a property, buying real estate bonds can be a good option for you. Here you put in part of your capital, and your capital grows slowly. Often you commit your money for a longer period of time and then at the end of this period you get your money back plus the return. So you do not receive monthly income, but you do see your money grow. With this way of investing in real estate, you let others manage your assets and they invest in housing complexes or commercial real estate at home and abroad. They decide when purchases and sales are made. With your money and others who also have bonds, houses are bought on your behalf, without you knowing exactly which buildings are being bought. Bonds are often reasonably seen as safe investments, but here too, performance can be disappointing. It is difficult here to have real insight and control over the real estate being purchased.
Way 6: Setting up a real estate fund
Way 6 is to set up a real estate fund. This can be with other friends or family members, or people you don't know. Together an amount of money is put together which increases the purchasing power. With a large amount you have more leverage than with just your own capital. In this way you can buy more houses or have entire new construction projects built, which you would not be able to do with your own capital alone. In this way there is a slightly better overview of what is happening and after that the money goes to you than with a bond. But also this way is not entirely suitable for a starting investor, It is best if you want to do this together with an experienced real estate investor.
Way 7: Giving a mortgage to an investor
Another way that is often overlooked is giving a mortgage to an investor. Often there are investors who have a lot of good deals on the table, but because their money is stuck in other real estate they cannot make the purchase. They then look for external financing. By giving such an investor a mortgage, you can set your own interest rate that you want to get back as long as it is reasonable. This allows you to enjoy monthly income and in many cases you will have your money back quickly when the investor resells the property.
In what ways does Property Professional invest?
Property Professional is mainly engaged in the development of homes. We see this as the safest way of investing in real estate. By buying and letting investment homes you are often very quickly assured of monthly cashslow, and in the long run you can sell the property at market value. So this is the ideal situation for a starter. We also find the other ways of investing very interesting, at the moment we are still looking for wealthy investors who want to set up a real estate fund together with us. We will mainly buy existing properties, rent them out and eventually resell them after a number of years.
Working together with Property Professional
Are you a wealthy investor who would like to set up a fund? Or are you a starting investor who would like to receive housing or provide a mortgage? If so, please contact us as soon as possible.
Property Professional is your partner in housing investments.
