Did you know that the real estate industry is considered one of the key contributors to the national GDP, pooling in an average 15% -18% to this national basket annually? Did you also know that the return on investments on real estate and property over the past century has outperformed almost every other investment class including stocks and the guaranteed government bonds? Having lived through the 2007/8 real estate bubble that burst into a financial crisis, you probably are familiar with the impact real estate industry has on the rest of the economy.
But what do these facts tell you about investing in real estate? That, with the right strategy, the residential, commercial, and industrial property space can be both highly satisfying and rewarding. And long gone are the days when the real estate industry was a preserve of the few members of the elite class and deep-pocketed realtors. Technology, lower mortgages, and ease of access to different types of loans have opened up the real estate space making it possible to invest from as low as $500 while promising even higher returns.
- 1 How do you earn from real estate investments?
- 2 Most rewarding opportunities in real estate investing
- 3 Why invest in real estate?
- 4 Bottom line
- 5 FAQ's
- 6 How much do I need to start investing in real estate?
- 7 How do I earn from Fundrise?
- 8 Is real estate investing right for me?
- 9 How much of skills and resources do I need before I start investing in real estate?
- 10 Am I too late in getting into property investments?
- 11 How do I decide on the best investment strategy?
- 12 Which is better between real estate and stocks?
- 13 Will my real estate investment guarantee stable and consistent profits?
In this real estate investment guide, we list some of the most rewarding opportunities currently available. But first, let’s understand how you can earn from real estate.
How do you earn from real estate investments?
There are four primary ways of benefiting from a real estate investment including:
- Rent: This is by far the most popular way of earning from the real estate and involves generating incomes from leasing a property you own. It is a passive income earner and one that guarantees an almost steady income stream.
- Profit margins: You can earn profit margins from real estate investments in either of these two ways: buying dilapidated houses, refurbishing them and selling them at a profit or by leasing a property and subletting for a higher amount and pocketing the extra amounts.
- Appreciation in value: Land and buildings are always up-trending, the ever-rising demand for residential, commercial, and industrial properties has served to consistently boost the cost of these houses up. This explains why the real estate market has recorded the most appreciation of all classes of investments for the past 100 years.
- Loan interest: Ideally, this method of profit generation involves lending real estate company money to help them pursue their ventures with the promise that they pay together with interest. Traditionally, this technique was a preserve of private equity funds. Technology has however birthed the all-inclusive crowdfunded real estate ventures.
Most rewarding opportunities in real estate investing
Why invest in real estate?
- Passive incomes: Most forms of real estate investing are largely passive or semi-passive income generating streams. Whether you are building rentals or investing in a real estate-focused company, technology and the availability of numerous real estate management firms have made it possible for you to concentrate on more important factors and have them managed by these professionals.
- Highly rewarding: The real estate market is arguably one of the most lucrative forms of investment currently available. When its aggregated return on investment over the last 145 years was measured against what most individuals consider lucrative investments like stocks and treasury bills, real estate posted a higher overall return on investment.
- Ease-of-access to funds: Given the ridiculously low interests offered on savings accounts by banks, every individual, private institution, and even the banks are always looking for ways to invest their disposable income in more lucrative ventures. You, therefore, cannot claim a lack of access to finances as long as you have a solid real estate investment business plan.
- Minimal risks: Most of these forms of investment are insured thereby reducing the level of risk your investments are exposed to. The industry is also massively regulated, effectively reducing incidences of fraud and conmanship.
The country economy is ever growing, albeit gradually, just as the population of its inhabitants. And these two are the primary drivers of demand in the real estate industry. Over the years they both have consistently pushed up the need for both residential and commercial properties, making this the most opportune time to venture into real estate.
The ease of access to loans, numerous passive and semi-passive real estate investment options, and the ability to minimize risk through insurance help create a conducive investment environment. Before committing to one or several of these real estate investment options we advise that you consider gaining as much information about the niche to check whether it matches your client descriptions.
How much do I need to start investing in real estate?
If you hope to start a real estate construction company or buy/build rental property, a substantial amount have to be invested. But if you are to invest in the more revolutionary crowdfunding real estate ventures like Fundrise and Rich Uncles you can invest with as little as $500.
How do I earn from Fundrise?
Fundrise offers two types of returns in the form of quarterly dividends distributed from profits earned through the utilization of your cash as well as the appreciation of your real estate shares. The company will also send you periodic cash advances if and whenever they decide to offset some of their assets under management. Plus, they promise to review the value of your shares based on the value of their underlying asset quarterly or semi-annually.
Is real estate investing right for me?
Yes, everyone stands to benefit from real estate investments. The fact that it is probably the most lucrative investment plus most of the investment options here don’t require prior experience in real estate makes it the most suitable for virtually anyone looking to invest or diversify their options.
How much of skills and resources do I need before I start investing in real estate?
No, unless you want to start flipping houses or establish a construction company, both of which require a tad bit of previous exposure in the industry. The rest that can be done through such proxies as property managers and Fundrise and don’t require you to have previous skills or experience in the industry.
Am I too late in getting into property investments?
Most investors that ventured into real estate right after the 2007/8 bubble burst, at a time when most residential and commercial properties sold for pennies, have earned 500%+ on most of these investments. But the industry is still on recovery mode and the demand for property is constantly exceeding demand, pushing prices up, and your possible returns on investments expected to be even higher.
How do I decide on the best investment strategy?
Based on your previous real estate industry experience (or lack of it) and the amount of disposable income at hand, you will find some of these investment options more appealing compared to others.
Which is better between real estate and stocks?
The performance of different stocks may outperform the real estate investments in the short term, but real estate ventures always have the last laugh. The high volatility witnessed in the stock and equity markets will often see the value of stocks constantly fluctuating between big wins and deep losses while the relatively stable real estate ventures assume an uptrend for the better part of their term.
Will my real estate investment guarantee stable and consistent profits?
No, even rental income that is often considered one of the most fluid forms of investment often fails the consistency test for the months falling in between the termination of tenancy and scoring another.