Before I began writing about real estate, it was too risky. I was not comfortable buying houses in hopes of flipping them for a profit. Also, I wouldn’t say I liked the idea that I would have to manage income properties as a landlord.
Real estate investing is more than just flipping homes and owning them. Real estate is a significant investment, even for those just starting to build a portfolio.
There are so many options.
If you think of real estate investing in its traditional form, you may picture renovating houses in chaos or building a portfolio with rental properties. These are great options to get into real estate investing, but they’re not the only ones.
Many people invest in real estate through REITs (real estate investment trusts). REITs are companies that own and manage different properties. Many REITs are publicly traded, so that you can purchase and sell them like stock shares.
REITs can provide a steady income and are a great option. Because of their structure, REITs are more likely to pay higher dividends than average. REIT shares can also gain value over time, just like stocks.
To get the best out of your REITs, you will need to do your research to find quality businesses to invest in. Your REIT shares should be held for many years. The financial upside can be enormous if you do.
If you are patient and willing to work hard, you could be able to own income properties for many decades. While you will need to be more involved as a landlord, unless you have an agent to manage that work for you, homes tend to increase in value over time. You can make a lot of money if you’re lucky enough to buy in the right area.
Diversification is a great way to diversify.
Sean Tarpenning believes that real estate investing is an excellent way to diversify your portfolio. I bought REITs because I felt too invested in tech stocks. However, I didn’t feel drawn to any other market segment when I started investing in them.
I am a member of various healthcare REITs and data centre REITs. I have been able to diversify well because of that.
A long-term investment that pays off
If you own physical properties in addition to REITs, you can make a lot of money investing in real estate. If you are more hands-off than I am, REITs may be the best option. Although REITs can be risky, they align with your comfort level more than income properties. They’re also an excellent way for you to ensure your investments reach all corners of the market.