The benefits of investing in real estate are numerous. With well-chosen assets, investors can enjoy predictable cash flow, excellent returns, tax advantages, and diversification and it’s possible to leverage real estate to build wealth.
Buying and owning real estate is an investment strategy that can be both satisfying and lucrative. Unlike stock and bond investors, prospective real estate owners can use leverage to buy a property by paying a portion of the total cost upfront, then paying off the balance, plus interest , over time. While a traditional mortgage generally requires a 20% to 25% down payment, in some cases a 5% down payment is all it takes to purchase an entire property. This ability to control the asset the moment papers are signed emboldens both real estate flippers and landlords, who can, in turn, take out second mortgages on their homes in order to make down payments on additional properties. Here are five key ways investors can make money on real estate.
- Aspiring real estate owners can buy a property using leverage, paying a portion of its total cost upfront, then paying off the balance over time.
- One of the primary ways in which investors can make money in real estate is to become a landlord of a rental property.
- People who are flippers, buying up undervalued real estate, fixing it up, and selling it, can also earn income.
- Real estate investment groups are a more hands-off way to make money in real estate.
- Real estate investment trusts (REITs) are basically dividend-paying stocks.