Realestate in the current time undoubtedly offers a great wealth-generatingopportunity. Not only are they tangible assets, but also you can utilize themas leverage for purchase beyond the amount you can afford a loan. Investment inreal estate properties is receiving great response given the benefits.
Theamount of capital a buyer can raise determines if they can purchase or developa project. This is where the investors can help. The investments of the peopleare entirely passive besides their contributed cash.
Thismeans the investors do not get involved in any management or disposal ofassets. So, without any hard work, you can get great benefits from real estateinvestments.
Soif you have decided to become a real estate investor, then here are the topways to make your dream possible.
1.Construction and development
Every year there is a significant increase in the number of new projects built and developed. With all the advancements and growth in a country, real estate grows continuously. Thus, there is a tremendous need for new construction projects.
Youcan consider investing in a group of developers and contractors who arebuilding single-family residential homes to commercial office spaces.
2.Crowdfunding
In today’s time, online fundraisers have received great popularity. Numerous platforms allow commercial real estate investment. Just like the REIT investments, the investors have the opportunity to invest as little as $500 and pool their cash with other investors to contribute to a big project. As a result, the investors benefit from the cash flow and the long-term appreciation of the property.
3.Exchange-traded funds
Anexchange-traded fund is a group of bonds or stocks placed into a single fund.Although the ETFs come with lower costs like mutual funds, they can be investedin stocks published by the real estate investment trust that owns hospitality,office retail, etc. Thus, such diversification helps reduce the risk ofinvesting in real estate.
4.Hard money lending
Ifyou have good cash but don’t want to invest in your deals, you can become ahard money lender. Numerous real estate investors take help from hard moneywhen they cannot gain a bank loan or when they want money in a short time.Further, hard money is also an option for investors looking for rehab andflipping the house quickly.
The hard money lenders charge the borrower an upfront fee along with 10-12%+ annual interest on the loan. This isn’t a bad deal, but you must be careful with the lending scenario to know you are not only and lending money to a good borrower but also for a successful project.
5.Hire a property manager
Ifyou want to invest in commercial real estate in your area but you do not wantany partners, you can consider hiring a property manager. In this scenario, youwill be an active investor who will have a full-service property managementcompany that will help make a project a passive real estate investment.
Thecommercial property managers charge approx 4% to 10% of the rents dependingupon the nature and size of the project. They will perform all the minorrepairs, vetting prospective tenants, touring, collecting rents, and more. Justremember the commercial investment you are making must be capable enough to paya property management company.
6.Mutual funds
Justlike the ETFs investments, you have the option to invest in real estate mutualfunds passively. They are a low-cost alternative to all the passive real estateinvestment options available in the market.
Onecan easily find a mutual funds track record that will offer confidence andcourage about future returns. Additionally, mutual funds are generally run byseasoned veterans and economists in the commercial real estate sector. Thus,you will earn well from it.
7.Owner financing
Ifyou don’t want to run a project of your own, you can become a lender forsomeone else’s project. Just like hard money lending, you will help a borrowerget an adequate loan for his real estate investment. It is an excellent choicefor those who already own a real estate as it will help maintain that passiveincome and avoid paying any hefty taxes.
8.Real estate company
Ifyou want to keep your investment local, you can directly invest in a commercialreal estate company located in your area. With this, you will have theassurance of seeing the property anytime you want.
Severalcommercial real estate companies deal in office parks, hospitality, shoppingcenters, and commercial real estate developers. You can choose any of theprojects you like to invest in, but it will be better to conduct due diligencebefore buying shares in a local company. This will guarantee safety for thefuture.
9.Real estate investment trust
Forinvesting in REIT, you need not own anything. The trust will help you diversifyyour portfolio as it will help you invest in multiple asset classes. Like thebonds and stocks, it comes with long-term data, which will help reduce anyuncertainty about the ups and downs of the real estate market.
Itwill be beneficial if you stay away from the non-trade REITs and purchase onlypublicly-traded REITs. This will help stay safe from lack of transparency, hirefees, and unnecessary risk.
10.Real estate notes
Realestate notes are similar to the owner financing as a mortgage loan secures thepromissory note. The loan is generally passed on a property that alreadyexists. When taking real estate notes from a bank, you are purchasing debtsthat are a lot lower than what a real estate investor will pay.
Ifyou have decided on real estate notes as your passive investment, it will bebetter to do thorough due diligence. This will offer you a good idea about thecertainty you are getting into, whether the investment is for a real estateinvestor or a bank because there is a chance you might end up getting thatproperty one day.
11.Syndication
Itis simply a collection of funds from various investors to acquire numeroustypes of real estate property. Like any other options mentioned above,syndication can be as small as buying a small office to building a large officearea.
Thecapital raised here can be used for renovation, acquisition, improvements,construction, and any other things a developer wants. The passive investorshere are called limited partners who gain some sort of preferred return on thecapital and equity in the property.
12.Transactional funding
Thismode of investment is a lot similar to debt financing and hard money. However,here you are, financing the project in between closings. It is a short-termlearning solution for real estate investors who plan to get in and out of thereal estate dues quickly. The wholesalers take maximum benefit fromtransactional funding to keep their double closing separate.
Conclusion
Given all the available choices choosing the right one for your passive real estate investment can be challenging. To make things easy, you can contact Private Capital Investors. They are a reputable firm that will help you decide the correct mode of real estate investment for your case. With their professional assistance, you will guarantee a secured and safe investment, which will bring good results.
