Real Estate Investing: Investment Types
Follow up on last weeks post, This weeks real estate investing step is Investment Types. There are two different ways to invest in real estate you will want to consider. Depending on your money down, earnings requirement, and cash liquidity, either of these options can be great for you! If you have any questions, feel free to contact me for more information. Together we can create the best investment plan for your family!
- REIT (Real Estate Investment Trust). If you are “cash strapped,” you can start real estate investing with a trust. This is not true real estate investment, but its helps get your foot in the door! With REIT there are three different levels of value: The property itself, the management and cashflow of the trust, and the trust fund itself. Unlike traditional direct ownership, a trust has much smaller margins and is more like owning stocks. If you don’t have a lot of cash to start up, REIT does help warm you up to the real estate investment market.
- Direct Ownership. The big one. With direct ownership, you have complete control over the property and rights to all of the revenue. Direct ownership is the ultimate desire for any real estate investor. While it requires a larger up front investment (you will need the down payment), direct ownership immediately starts generating income. Any projections that we create always include the cost of professional management, and tenant placement. With basic math, a 200k investment with a renter and normal real estate appreciation (3% is average for the industry) your looking at a conservative investment value of 290k. Your renters will pay off your mortgage, and you will be 300k closer to financial independence! Direct ownership allows you to start planning for the future with steady, sure income for the lifetime of your investment.
Next week we will introduce some great research tools before we jump into finding the property! See you next week!