If you have ever spoken with a financial advisor or retirement specialist, then it is quite likely that you have discussed investment diversification. In other words, having all of your eggs in one basket can be boom or bust. With this said, real estate can be a great addition to anyone’s investment portfolio. There are various ways to gain exposure in real estate investing and we discuss several below.
Approaches to real estate investing
- Rental property: Perhaps the most well known form of real estate investing is simply buying a property and becoming a landlord. Of course, this investment approach will likely require a large amount of capital for the initial purchase. Furthermore, it will also require a hands-on approach since you will be responsible for most maintenance issues at the property. In addition, it is also possible that you may have to deal with difficult tenants. On the bright side, rental properties typically offer a great source of additional revenue and you should also benefit from your property appreciating in value over time.
- Home flipping: Home flipping refers to the practice of buying a home and quickly reselling it for a profit, usually after making repairs or improvements. Typically this process is completed within a year or so. Similar to a rental property, this type of investing will also require a large amount of capital for the initial purchase and the cost of the repairs and improvements. Although this strategy can result in large profits in a relatively short amount of time, it also carries a risk should home prices fall.
- Real estate investment groups: This is considered to be a hands-off approach to real estate investing. Similar to a mutual fund that may invest in various stocks and bonds, a real estate investment group is a similar approach for real estate assets. Of course, this asset also requires capital and access to financing options. On the bright side, you won’t be receiving a phone call from a tenant at 10:00pm on a Friday night to inform you about a clogged toilet.
- Real estate investment trusts (REIT): This is an investment tool that is created by a corporation and uses investors’ funds to purchase properties. If you are looking to get exposure to real estate investing without any hands-on effort, this is a great option. Similar to stocks, these properties are bought and sold over the various exchanges.
Summary
Although real estate investing can require large sums of capital up front, it does allow you finance a large portion of the investment as well. This is vastly different from stocks, bonds, or cryptocurrency in which the investment must be paid for in full up front. Home ownership is one of the best ways to build wealth and South Florida continues to be one of the most desirable locations in the country. Therefore, investing in South Florida real estate can be quite lucrative.
At Live South Florida Realty, Inc. we have assisted many clients build their real estate investment portfolios. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!
