Top 8 ways to invest in real estate

Investing in real estate is sometimes like visiting a candy store, as there are so many options that it becomes difficult to decide which one to “try” first. While most are familiar with rental properties, which are real estate where some people invest to earn money from monthly tenant payments, this is just one of several ways to earn real estate income.
If you want to know the different ways to earn money in real estate, in this article, we will take an in-depth look at some of the best ways to invest your money in real estate. We will also add all the pros and cons within each option so that you can see which would be the best that goes with you, to help you make the best decision about what type of investment is best for you.
Sanya Rambally Conklin present 8 ways to invest in real estate. Hopefully it will serve you!

1) Housing for rent
This is the best known of all. Where you buy a property to be able to rent it. Look at the end of the article as we go into more detail about the benefit of this type of investment.
Pros:

• Most common type of residential property on the market.
• Easy to find in any real estate market
• Financing is profitable and inexpensive.

Cons:

• Limited exit strategies if you want to sell the property, the best option is to sell to another investor or to the tenant so as not to assume vacancy expenses, but they are difficult to execute for individual investors.
• Not all properties are good options to rent, since the demand from tenants can be low or with returns well below the market if the properties do not meet the necessary characteristics (size, location, type, etc.).  

2) Small multi-family property
This is when to buy between 2 to 3 houses, but that they are independent units.
Pros:

• Duplex, triplex, and quadruple properties are a good way to scale up your investment and focus your efforts.
• Property management and maintenance can be easier when multiple tenants are side by side.
• The risk of vacancy (time without rent, cash flow that does not arrive) is diluted between the various units

Cons:

• Not all banks will give you loans on multi-family rental properties or ask for a much higher down payment.
• Limited exit strategy when selling to another investor, usually requires the sale of the units independently

3) Turnkey properties
These are the properties that are already fully equipped and with a tenant, also called “turnkey properties”.
Pros:

• Cash flow begins the day the deal closes
• Good for long-term real estate investments or focused on income and immediate cash flow rather than capital appreciation
• They are usually very easy to finance, especially when they are already generating rental income.
• They allow you to increase your income immediately, which gives you space to support this income to the Bank for future investments.

Cons:

• It is usually purchased at a price that includes the market price plus the costs of equipment borne by the current owner, also, being a solid source of income it is unlikely that you will get a substantial discount in the price.

4) Temporary or short-term rentals
These are properties that are rented for short periods of time on online travel platforms such as Airbnb, Booking.com, among others.
Pros:

• Temporary and vacation rentals can help you generate higher rentals in specific periods, such as summer seasons or when there are high demand events in the areas where they are located.
• Rental periods usually range from one night to several weeks, which gives you flexibility if you use the property yourself

Cons:

• Operating costs are higher due to: higher tenant turnover, extended vacancies (days off), or landlord payment of utilities.
• Property management is more intensive because short-term rental is similar to running a hospitality business, which requires a lot of time on your part or having a customer service that is usually more expensive than traditional ones. , since it must include services such as recurring cleaning, laundry, bathroom and kitchen utensils, and attention to needs outside of regular hours, etc.
• You run a higher risk of property damage and theft, since while these platforms include insurance, the procedure for executing them is often bureaucratic and requires proof of damage to be capable enough to assign the current tenant.

5) Repair and sell real estate
These are properties that are in poor condition, and you take the opportunity to buy them at a low price, repair them and then sell them at a margin. Also called "fix and flip".
Pros:

• They have the potential to make a good amount of money in a short amount of time.
• Multiple exit strategies selling to an owner-occupier, an investor, or as a turnkey rental property.
• In theory, it is the best option for capital-intensive investors looking to work full-time in real estate in a specific market.

Cons:

• High-risk investment strategy since it requires correctly synchronizing the various associated components (market, agents, builders, owner, banks, sales strategy, etc.)
• It requires developing a trustworthy team to control that the budget for repairs does not explode.
• It requires experience in the initial analysis of the properties to be able to correctly plan the investment to be made.
• It can be extremely difficult to sell the home at the market price, especially if there are new home developments in the area, which requires a substantially lower purchase value to justify the investments to be made plus the discount on the price to be delivered at the sale.

6) Contract the sale of the property (Wholesaling)
This is a form of real estate investment without actually taking ownership of the property.
People search for homes priced well below market, accurately estimate needed repairs, and turn over the business (contract) to another investor who buys the property. They earn money by sharing part of the profit with the initial owner
Pros:

• Money earned by collecting a portion of the profit by placing very little equity (usually they give money to the initial owner to give them the option to analyze the cost of the repairs and find out who to place the property)
• Buying from people who are dedicated to this business and who have experience placing these businesses is a good way to make quick profits if you are looking to have the asset for a period of time.

Cons:

• High risk strategy that requires in-depth knowledge of the market.
• It requires having an experienced team that allows the initial analysis and matches the final results of the investment, otherwise, you get a bad reputation among investors and your ability to generate new business is limited.

7) Real estate investment trusts
This occurs when one or a group of owners give their assets to be managed by other people, institutions or companies. At the same time, these companies can invite other investors.
Pros:

• Real estate investment trusts can be private or can be listed on major stock exchanges.
• This is an easy way to diversify your investment by asset class or geography.
• These trusts can specialize for example in casinos, agricultural land, offices, logistics centers, cell phone towers, housing, etc.
• It provides much more liquidity to your investment, being able to sell your participation more easily, especially if the trust is listed on a stock market.

Cons:

• Depending on where you invest, you may risk losing many of the tax benefits that direct ownership offers.
• It is equivalent to owning a share of a company, rather than investing in real estate, for which the potential appreciation of the asset you buy was already captured at the time the trust was structured and the sale prices to the public were defined. Substantial changes in the market are required to generate a relevant capital gain.
• You lose the possibility of using leverage to increase your reach and profitability.

 
8) Crowdfunding platforms
Crowdfunding occurs when a large number of people contribute small amounts of money to invest in real estate, investing in various types of assets: income-generating properties, loans to real estate companies, association (purchase of equity) in real estate projects, etc.
Pros

• In theory it is a good way to (indirectly) own a small piece of an asset, such as a shopping mall, an office building, or a large apartment development project.
• Investors in mutual funds earn income from quarterly distributions and a share of the profits when the property is sold.

Cons:

• The potential gains or losses from a crowdfunding investment will depend on the experience of the crowdfunding sponsor finding and managing your project.
• It can be much more risky than other real estate investments, given that there are multiple forms of asymmetry in information (and / or knowledge) between the captor of the resources and the investor, so it is key to work with a trusted platform, that analyzes and clearly presents the risks of each investment and with experience in the real estate sector in particular.

Conclusions
These were 8 ways to invest in real estate. As you can see, there are many options which you can choose from, depending on how much money, time or tastes you have. There are some where you take more prominence, and there are others where you let others do most of the work, but in all of them you find a possibility to increase your income and assets. We hope this article allows you to choose the right type of real estate investment for you.