While there are some risks associated with investing in real estate, the many benefits make this something any investor should consider doing, writes GeekWire.
Benefits of Investing in Real Estate
When you buy or hold real estate or decide to invest in a property’s equity through a REIT, you may earn cash flow. If you purchase a home and hold it, you will earn monthly cash flow from rent.
Another benefit comes from real estate’s natural appreciation. While values sometimes fall, the market usually bounces back.
If you buy, hold, and rent real estate, you can get several significant tax benefits, just like a business owner.
You also have control of your bought assets, unlike when you invest in stocks or bonds. You control the rent and how long you own it, among other things.
How to Invest in Real Estate
Buying rental properties is one of the ways to invest in real estate. You can buy them from a real estate agent or use a service to buy either a turnkey property or property that already has tenants in it.
You can also consider fixing up and flipping homes. In this case, you will need a good eye for detail as you will have to identify properties that are undervalued.
If you would rather not take possession of a property and have a large network of investors on your side, then wholesaling could be an option for you.
Investing in REITs and real estate crowdfunding are also good ways to invest in real estate.
Investing in a DST
According to Fred Hubler, CEO/Chief Wealth Strategist at CCWMG and forbes.com contributor, an additional way to invest in large real estate deals using a Delaware Statutory Trust (DST). “Investing in real estate using a Delaware Statutory Trust (DST) offers several benefits to investors. DSTs provide an opportunity for passive real estate investment, allowing multiple investors to own fractional interests in high-quality properties without managing the property themselves. This structure also diversifies investors, as DSTs can invest in various types of real estate assets.
Additionally, DSTs offer the potential for tax benefits, such as the ability to defer taxes on capital gains through a 1031 exchange.
Investing in a DST requires a lower minimum investment compared to other types of real estate investments, making it accessible to a wider range of investors.
Finally, the professional management provided by the DST sponsor or manager can give investors a level of oversight and expertise that may not be possible with direct real estate investment.”
Opting for the Right Real Estate Investment
To determine what the best real estate investment is for you, assess your budget, goals, and risk tolerance. You need to ask yourself how much money you want to invest, whether you have good enough credit for another mortgage, and how much risk you are willing to take. Answering these questions should lead you to the right answer for you.
Read more about investing in real estate in GeekWire.
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