4 Smart Real Estate Investment Options

August 19, 2020

Buying property, land or real estate in general is a great way to start to grow your wealth. Now seems like a good time to invest in real estate since not only more growth is likely on its way, but there are also more ways than ever to invest in housing and real estate which is beyond just in the traditional sense of being a landlord.

Each type of real estate investment has its pros and cons, and have unique benefits and considerations that you should keep in mind when deciding where and how to invest your money.

Residential Property

Residential property is the most straightforward form of investment and perhaps the best to start out with if you do not have prior property investment experience. A residential portfolio not only offers the best market growth (over the recent decades), but it also provides the best rental stability. Even if the rental income will be going towards your mortgage payments, property tax, maintenance costs, and possibly professional property management. Investing in a residential property therefore, might be a smarter move when you expect yields in the long run.

Commercial Property

Commercial property is another good option to consider. Commercial property means any form of property that can be used for business operations such as offices, factories and retail stores. The benefit of commercial property is that you can expect a much higher rental return compared to other property types and also expect much longer leases than residential property. The difficulty for commercial property is replacing or adding new tenants.

Vacant Land

Vacant land can be considered the best type of real estate investment due to the typically low prices and the almost non-existent running costs. Typically, the only expense of owning land would be in property tax. Purchasing land can definitely bring you strong returns on investment, but needs to be done carefully as it is probably the riskiest investment option. There are a number of variables that pose a great risk when you purchase land such as zoning, access to utilities and environmental issues. One of the major downside of investing in vacant land is the difficulty of finding finance for the investment. Finally, in order to make the most out of your vacant land investment, you will need to have great knowledge of the market and the area, and be able to forecast the area’s development and make sure that in the long run this vacant land’s value will increase and there will be a number of buyers interested in using the land for real estate development projects.

Real Estate ETFs & Mutual Funds

An exchange-traded fund, also known as an ETF, is a collection of stocks or bonds in a single fund. ETFs are similar to index funds and mutual funds in the fact they come with the same broad diversification and low costs over all. If you’re angling to invest in real estate but also want to diversify, investing in a realestate themed ETF can be a smart move. There are plenty of other ETFs that offer exposure to real estate, too, so make sure to do your research and consider the possibilities. Just like you can invest in real estate ETFs, you can also invest in real estate mutual funds.

There isn’t one single way to determine what the best option is, since everyone has multiple boxes they need ticked, have different goals. There are number of factors that play a role in the ascertaining the suitability of a real estate investment, and the kind of funds required to further those goals too.

We at Euphoria Loans are always happy to help you find the right finance options to help you grow your wealth and build a portfolio. You can reach out to us, or just request a call back and one of our experts will contact you at the earliest.