Real estate is a real gold mine for investors across the globe. The bulk of the wealth of the top 1% of Americans is built in the property market. While there are numerous other investment opportunities, there’s also a lot of fool’s gold lying around, and making informed decisions the only way to steer away from it.
Some markets are coming out of the doldrums, while some may descend into it. To come up roses in such a volatile and complex climate, investors need strategies as sound as a dollar. The good news, though, is that there is a slew of innovative platforms and tactics for investing in residential real estate.
Foundations of trust
One of the exciting new developments is the proliferation of real estate investment trusts (REIT). Their business model is built around the strategy of purchasing or developing income-generating assets in a certain segment of the market. That is to say that their performance depends on cash flow and sales profit.
Much like buying stocks or mutual funds, one can acquire shares in a public REIT. Some trusts focus on residential buildings, others invest in residential real estate, and there are those that specialize in a specific type of property.
Another viable option is to utilize real estate partnerships. They can be constructed in a variety of ways: as tenants in common projects, general partnerships, limited liability corporations (LLCs), and limited liability partnerships (LLPs).
Each of these models has its pros and cons, which suggests that investors have to measure twice and cut once. Some of the most important considerations involve decision making, selection of managing partner(s), and written real estate partnership agreements.
Power of the crowd
There has never been a greater assortment of tools in the arsenal of an individual investor. Peer-to-peer (P2P) lending platforms are one of the newest trends in the real estate market. Namely, Fundrise took off in 2014 ad broke new ground with residential real estate loan products.
SoFi has followed suit, offering mortgage underwriting and P2P loans to borrowers with solid credit. This is only the beginning, as equity crowdfunding is expected to gain even more traction and shift the property landscape in 2017 and beyond.
The borders of space crumble in the presence of globalization and owning a foreign real estate is potentially a very lucrative endeavor. For instance, real estate experts predict that markets in countries like Malaysia will explode in 2018 and bring immense wealth to those who tap into them.
Websites from Australia offer real estate in Tasmania, while others point to Europe and markets such as Sweden. Even if you live in a stable economy like the US, it makes financial sense to spread your wealth and expand the safety net.
It is becoming harder to sell due to the surge in renting. Financial hiccups prompt people to delay big purchases and resort to other options. As a result, there are more renters in the US than ever before. The problem, however, is that most rental properties available for sale in many parts of the country do not promise great returns.
Still, there are some underutilized techniques that could make a difference. Take the example of master leasing. It refers to the practice of leasing from a landlord and then subleasing to an occupant tenant to fill the gaps between the rents.
Ahead of the curve
The real estate has evolved into a new asset class, joining the ranks of bonds, stocks, and cash. Investing in the property market is also a sound tactic to diversify your portfolio and mitigate risk. Indeed, the property is a substantial, distinguished part of any investment portfolio, although it can also become a money pit.
In any event, the profit is not just there for the taking. You have to discover a great place or a way to invest and do your homework. Global transactions will reach new heights, but to reap benefits, you must make an effort to stay on top of emerging trends and anticipate those that wait around the corner.