What are the best real estate investments out there? That is a question that comes upto the mind of any prospective investor looking to get into the real estate business. But no matter how hard you try to determine what the best real estate investments are, you will be facing a challenge.
That is because the best real estate investments are not set in stone; they differ and change based on the investor who is looking at them (not too different from the quantum mechanics of photons and particles). So, instead of telling you what the best real estate investments are, we will try to classify them based on a number of factors, and you will have the liberty to choose the ones that suit you best.
Best Real Estate Investments: Time
It is well known that most real estate investments are long-term investments; they require time dedication and patience. But this is not always the case.
In the world of real estate investments, there are two ways to make money: you either make a burst of profit, or you generate a steady income over a period of time. Simply put, in the real estate investing business you either make money by selling properties or by renting them out. Based on this criterion, the best real estate investments for a guaranteed profit either in the short term or in the long term are:
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Traditional Rental Properties
Traditional rental properties are real estate investment properties that are rented out to long-term tenants, or through a lease with a duration of 6 months or more. The best part about traditional rental properties is that once you manage to find a tenant to rent the place, you’re guaranteed to generate a passive income through your investment for the duration of the signed lease. This is good in comparison with short-term rental properties or Airbnb (more on that later) due to the low turnover rate, or the rate at which you will be trying to find new tenants to rent the place.
Related: The Best Rental Real Estate Strategies for Beginners
The secret to any successful traditional rental property investment is long-term expense planning – the ability to accurately predict any expenses that might come up during the duration of your investment in order to avoid facing any surprise expenses that might cause your investment to lose money.
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Wholesaling
Meanwhile, wholesaling must be the fastest way to make money in real estate investing. Wholesale real estate is the process of signing a property that is on the market for sale under a contract, finding an interested buyer, and matching the property with that buyer. In real estate wholesaling, you don’t necessarily need to purchase the property that you’re selling, which makes it a great choice for people not looking to invest in real estate with little to no money.
The way it works is that you find a seller, you sign a contract with him/her in order to get the property off the market, then you find a buyer interested in purchasing the property, you sell the property to him/her at a higher value, and you earn a profit depending on the margin of the selling price.
Before you consider real estate wholesaling, though, make sure to consult a real estate lawyer to make sure that wholesaling is not illegal in your state or city, as wholesaling is very similar to brokerage (depending on the state’s definition of it), and without a broker license you might end up in jail.
Best Real Estate Investments: Skills
The majority of the best real estate investments require a high amount of skills in some area or another – but not all of them.
In the real estate market, most investments require a level of skill to be involved in order to make a successful investment. Whether it is social skills, marketing skills, analytical skills, or all of them – if you’re considering real estate investing, take a look in the mirror and make sure that you have the required skills for your investment.
Generally speaking, the type of real estate investing that requires the highest amount of skills (which is also associated with the highest amount of risk) is:
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Fix-and-Flip
Fix-and-flip is the process of purchasing an investment property at a much lower market value due to the property’s being in a bad condition, renovating the property, and then selling it back at a higher market value – just make sure that the selling price is higher than the buying price plus the renovation costs… obviously.
Related: Considering a Fix & Flip? Ask Yourself These 3 Questions First
This requires a high skill because not only will you need to find the proper property and then find a buyer for it, but you will also need to know what exactly you want to fix or renovate in the property in order to raise its value and make it attractive to buyers. This might not seem like much, but if you decide to go with this type of real estate investing, make sure to educate yourself very well first.
Alternatively, you can just throw your money into a REIT and let it do the work for you…
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REITs
Real Estate Investment Trusts (REITs) are probably the easiest way to invest in real estate. In simple terms, REITs are very similar to stocks: you give them your money, they add your money to a pool of other investors’ money, and they invest this money in real estate properties and split the profits among the investors.
REITs investments require a minimal amount of involvement from the investor’s side. The REIT will take care of everything related to the actual properties: from managing them, to finding tenants, to repairing the properties, etc.
Related: What is a Real Estate Investment Trust (REIT)?
The best part is that you actually get partial ownership of the properties that the REIT invests in. This means that you could be bragging to your friends about owning a part of that 50-story hotel or new hospital that is being built without being involved in the process at all.
Best Real Estate Investments: Conclusion
When it comes to the best real estate investments, there are many different ways to look at them. Whether you’re basing your judgment on time, skills, profitability, or passive income, each real estate investor’s personal preferences will lead him/her to a different list of the best real estate investments out there. But in reality, all real estate investments are the best real estate investments, when done correctly and by the right investor. If you’re not into waiting 6 or 7 years until your real estate property pays off for itself and starts generating pure profit, then rental properties are not for you. If you’re not willing to get personally involved in your investment, then perhaps you should consider REITs… you get the picture.
Whichever you choose of the best real estate investments, make sure that you first hit the subscribe button on Mashvisor, and you will find something in there that will help you make the best real estate investments become a reality for you. Give it a look, you won’t regret it.