When most people think of real estate investing, their home is probably the first thing that comes to mind. However, real estate investors have a wide range of options beyond physical properties.
Over the past 50 years, real estate has become a popular investment alternative. Let's look at some of the best options open to individual investors and the key reasons why one should invest in real estate.
Ways of investing in real estate
Rental Properties
Investing in rental properties means stepping into the role of a landlord, which comes with significant responsibilities. As a landlord, you'll handle tasks such as paying the mortgage, property taxes, and insurance, maintaining the property, finding tenants, and addressing any issues that arise.
Unless you hire a property manager to oversee these tasks, managing a rental property can be a hands-on, 24/7 commitment, which isn't always easy. However, by carefully selecting both properties and tenants, you can reduce the likelihood of major challenges.
Landlords normally earn money in two ways. First, through the collection of rent, which varies with location. Too much rent will deter the tenants, and too little will mean losing the potential income. Most landlords charge enough rent to pay off the mortgage until most of the rent collected is pure profit.
The second way of earning is through property appreciation. In case your property appreciates in value, you can sell it at a profit or borrow against the equity for future investments. While real estate generally appreciates over time, it is not guaranteed.
Flipping Houses
House flipping is another way of investing in real estate and is often compared to day trading rather than buy-and-hold strategies. Flippers buy properties with the expectation of selling them within just a few months for a profit.
The two main strategies for flipping are:
Repair and Update: Buy a property that needs to be improved, improve it within a short time frame, and sell it above the investment.
Hold and Resell: Investors buy properties in markets with rapid appreciation in value. They hold these for short periods and then sell them at a profit without major alterations.
Both strategies carry some risk, especially if the property does not sell at an expected price. Flippers usually do not have sufficient resources to service mortgages for long periods, so fast sales are crucial. However, done correctly, flipping can pay big returns.
Real Estate Investment Trusts (REITs)
An REIT is a vehicle by which investors can pool funds together to buy, hold, and sell income-generating real estate. REITs are traded on major exchanges just like stocks and ETFs.
To qualify as a REIT, the entity must distribute 90% of its taxable income as dividends to shareholders, enabling it to avoid corporate income taxes. This makes REITs an appealing option for those seeking regular income, along with the potential for property appreciation.
REITs invest in a variety of property types, including shopping malls, healthcare facilities, mortgages, and office buildings. Unlike direct real estate investments, REITs are highly liquid, making them convenient for investors who prefer flexibility.
Real Estate Investment Groups (REIGs)
Real estate investment groups (REIGs) function like small mutual funds for rental properties, offering an alternative to directly managing properties as a landlord.
Normally, a company will develop or acquire a group of buildings, such as apartment complexes, and then sell units in the group to investors. In return, the company manages the properties, including maintenance, tenant sourcing, and advertising, for a percentage of the monthly rent.
In most cases, rents are commingled to prevent against vacancy, ensuring that the investors can pay their mortgage no matter what. Nevertheless, the quality of REIGs may vary with the managing company; others may have high charges on them. As is usually the case, proper research precedes investment.
Real Estate Limited Partnerships (RELPs)
A real estate limited partnership, RELP, is essentially the same thing as an REIG except it operates for a set term. It is established for the purpose of acquiring and managing a portfolio of properties or one large property.
The general partner usually is a seasoned property manager or real estate developer and runs the project, and limited partners contribute funding in exchange for ownership shares.
The returns from the properties come in the form of periodic income distributions, but the major returns come when the assets are sold, hopefully at a substantial profit, at the end of the partnership's lifecycle.
Real Estate Mutual Funds
Real estate mutual funds mainly invest in REITs and real estate operating companies, thus offering diversified exposure to the real estate sector with minimal capital. These funds often offer a broader range of investments than what individual REITs can provide, making them attractive for those seeking diversity.
Besides being liquid, real estate mutual funds offer the advantage of professional analysis and research, which may include detailed information about asset performance and market trends, which will help investors in decision-making.
For more speculative investors, some funds allow for tactical weighting in specific property types or regions, offering the potential for higher returns in specific market conditions.
Introducing Compound Real Estate Bonds (CREB)
While traditional real estate investments like rental properties or flipping houses require significant effort and capital, Compound Real Estate Bonds (CREB) offers a simpler, more accessible way to invest in real estate-backed assets.
CREB is a unique platform that combines the stability of real estate with the benefits of fixed-income investments. By offering high-yield savings bonds with an impressive 8.5% APY, backed by real assets and U.S. Treasuries, CREB ensures security and steady growth for your investment.
Key features include:
- No fees: Keep more of what you earn.
- Flexibility: Withdraw funds anytime, without penalties.
- Auto-investing: Set your preferences and let CREB do the rest, ensuring consistent returns.
- Round-ups: Automatically invest spare change, making it easy to grow your portfolio.
Whether you're a seasoned investor or a beginner looking for an alternative to traditional real estate, CREB provides a hassle-free option to earn fixed income without the challenges of property management or market speculation.
Explore how CREB can be part of your real estate investment strategy today!
Conclusion: Invest Smarter, Not Harder
Real estate has long been a cornerstone of wealth creation, offering diverse investment opportunities for individuals of all backgrounds. Whether it's managing rental properties, flipping houses, or exploring options like REITs and real estate mutual funds, there's a path to suit every investor’s goals and risk tolerance.
However, not all paths require significant time, effort, or capital. Compound Real Estate Bonds (CREB) presents a modern, hassle-free way to benefit from the stability of real estate while enjoying consistent, high-yield returns. With its 8.5% APY, no fees, and user-friendly features like auto-investing and round-ups, CREB is redefining how investors can participate in the real estate market.
If you're looking for a simple, secure, and flexible way to grow your wealth, Compound Real Estate Bonds is your answer. Take the next step toward financial independence—explore CREB and discover the power of real estate-backed bonds today.
