If you are looking for your next business venture, maybe it’s time to put your money in real estate. Although prices rise and fall on the state of the economy, real estate remains less volatile than the stock market.
Why you should invest in real estate?
- Relatively low risk
Investing in real estate is relatively low risk compared to other investments. Property values are likely to appreciate over time and, unlike stocks which could lose 70% of its value in one fell swoop, trends in real estate properties are predictable. In most cases, you’ll end up selling your property at a price that’s more than what you initially paid for it.
- Higher returns
There are multiple ways you can invest in real estate to realize higher returns:
- Buy a house and flip it – renovate the property and quickly sell it for a profit
- Buy a house in a rapidly rising neighborhood, wait for a few months, and then sell the house when prices are peaking
- Lease or rent out your property
- Turn the house or a piece of property into a luxury inn, a boutique hotel, serviced apartments, and the like
- Consider a career as a developer
- Attract more potential tenants
If you decide to rent out your property, improve its appearance and functionality to lure in more takers. Look into renovation trends and calculate the cost of, say, a kitchen upgrade against the amount you want to rent the home for.
A report by Apartments.com also revealed the features and amenities that renters will care about in 2019:
- Outdoor community living was number one on the list of amenities, with “balcony space” and “dog-friendly” as the most searched terms on their site
- Indoor community spaces within the neighborhood where people can mingle and relax
- Smart home technology like a smart lock, an integrated home assistant, or smart home devices
- Environment-friendly elements like recycling options, sustainable practices, and green initiatives
- Inflation protection
By default, investing in real estate protects the owner from inflation. For example, the value of your property will increase by 5% by the end of the year if that year’s inflation rate is at 5%. Population growth is also a factor in raising the value of a home due to increased demand.
How to invest in real estate?
Now that you have a list on the significance of investing in real estate towards your goal of financial stability, here are some tips on how to do it.
- Buying rental property
Whether it’s buying townhouse as investment, a commercial property investment, or maybe even buying farmland as an investment, you can make your property available to lease or rent out. The rent that’s paid to you can help pay for your mortgage on the property.
You can also advertise the availability of your home for short-term rent on AirBnB. Typically, owners of condos and houses will rent out their fully-furnished properties for an overnight stay or up until six months. If you live in the property, you can rent out a spare bedroom; when you’re away on business or vacation, you can rent out the entire place.
- Offering rent-to-own properties
Renting to own is similar to renting out your property with one key difference. The tenant’s monthly rent accumulates until the whole property is paid for. The upside of this arrangement is that the tenant is likely to take care of the property with the knowledge that they will soon be its owners. Landlords can make contracts that end with the tenants owning the property within 20 years or so.
- Renting out vacation properties
Most homeowners who purchase a vacation property often regret their purchase when they realize that staying in these properties for a very limited time isn’t giving them their money’s worth. A better option is to rent out your vacation home while you’re not around. Of course, the problem with this is apparent – both you and your potential tenants may want to use the place during peak season, which is summer for a waterfront home, or winter for an alpine retreat. That said, your vacation rental can pay for the home’s maintenance costs.
Thinking of investing in Minnesota real estate? My partners and I at Prairie Home Realty would love to hear from you. Call 320.589.2159 or email team(at)WeGetRealEstate(dotted)com so we can help you identify the best real estate investment properties for you.