There are two major ways you can get involved in real estate ownership. The first is to buy real property and use it as where you reside, your office, or factory. The second way is to buy real property as an investment property and make money out of it. The act of allocating funds to the purchase of real estate with the primary intention of making profits is known as real estate investing. Investing in real properties is a very good way to diversify your assets. You stand the chance of making profits through rental income and capital appreciation. Buying land, office buildings, apartment complexes, hotels, retail centers, resorts, golf courses, warehouses, and single-family homes for the sole purpose of leasing them out to others in return for rental income are examples of direct real estate investing. As a real estate investor, you can decide to concentrate on one aspect of investment or you can get involved in many.
Land: Any type of land can be invested in. You can invest in agricultural land and earn rental income from farmers who lease the land for farming and ranching purposes. Land developers buy vast of land for the construction of all kinds of buildings which they eventually sell to maximize profit. You can also invest in residential land and lease or resell to estate developers at a profitable rate. The practice of buying vacant land and keeping it to resell when it appreciates in value is called land speculation.
Buildings: Commercial buildings, residential buildings, and industrial buildings can be purchased for investment purposes. This does not necessarily mean that as an investor, you must buy a whole structural edifice. You can buy part of a building such as a flat/apartment, an office space, or whatever you can afford. Whichever choice you make, remember to obtain a title document, which gives you the right of ownership and the right of use of the property. Direct investment in real properties requires time and good management. It also needs a huge amount of minimum investment capital. You can employ estate managers to help you manage your real estate investment if you are too busy. But this service comes with a fee which will reduce your profit margin.
On the other hand, you can decide to make an indirect investment in real properties by buying shares of companies that own and manage income-generating properties. These companies are called Real Estate Investments (REITs). One advantage of this kind of investment is that you can start with a small amount of capital. However, you will only gain from dividend payment and capital appreciation of the shares but not from the capital appreciation of the property.
The act of allocating funds to the purchase of real estate with the primary intention of making profits is known as real estate investing