The range of ways to invest in real estate is varied. Stock market options include real estate investment trusts (REITs) and mutual funds. On the other end is the option of renting out a room through an Airbnb site.

Studying each option will help you decide where to begin and which options are suitable for you and your budget. When you decide on an opportunity, research as much as you can about it. Knowledge is power. That is true when it comes to real estate investments.

Real Estate Investment Options

  • Real Estate Investment Trusts (REITs)
  • Real Estate Investment Groups (REIGs)
  • Real Estate Limited Partnerships (RELPs)
  • Real Estate Mutual Funds
  • Real Estate Crowdfunding
  • Real Estate Owned REO
  • Real Estate Foreclosures
  • Rental Properties
  • Flipping Houses
  • Airbnbs

Let’s look at the least expensive option first. Then gradually the more complex real estate investment options. This article will give you a brief idea of each investment.

Airbnbs

These are short-term rental accommodations. You use online platforms to promote your houses, cabins, or rooms. Advertising your Airbnb on Facebook will get you more holiday and vacation renters.

Airbnbs are popular with vacationers and people who want a few days away. Some investors move out of their homes for the period they are rented. People living in expensive properties find renting a room helps pay the mortgage.

Flipping Houses

Investors buy houses through a bank’s real estate-owned (REO) program. Or a bank foreclosure program. Investors also buy properties from the owner. They repair and refurbish these properties in the hopes of selling them quickly.

Many investors do the labor themselves to make as much money on the re-sale as possible. House flipping requires a keen understanding of the local housing market. Investors need to consider the expenses. So they do not lose money when they sell the property.

Rental Properties

Investors buy and hold properties as an investment for rental income. They buy houses through bank real estate-owned (REO) programs or bank foreclosures. They also purchase them from the owner or through a real estate agent. A close examination of the money is vital to make a profit on these properties.

You can determine if your rental property is making money by using the calculate cap rate.

Real Estate Foreclosures

Banks sell foreclosures at auction, listing a minimum bid price. An investor will purchase a foreclosed property at auction to repair and use as a rental or re-sale.

Real Estate Owned (REO)

These properties are owned by a bank or mortgage company. Properties that have not sold at their foreclosure auctions become REOs. Sometimes the bank sets the minimum bid high because the mortgage on the property is high. REOs can be sold as a package group of several properties.

Real Estate Crowdfunding

An individual or company acts as the sponsor who organizes the investment project. The sponsor uses a crowdfunding platform to gain investors. Each investor provides some of the money needed to fund the project for a share of the profits.

Real Estate Mutual Funds

Mutual funds invest in REITs and companies operating real estate. Generally, they provide investors with a broader asset base.

Real Estate Limited Partnership (RELP)

RELPs are like real estate investment groups. It is formed to buy and hold property or properties for the short term. A property manager or development firm serves as the general partner. Investors are sought to provide financing for the project.

Real Estate Investment Groups (REIGs)

REIGs are like small mutual funds for rentals. The company buys rental buildings or apartments. Investors are allowed to buy into the program. The company manages the properties for a percentage of the rent.

Real Estate Investment Trusts (REITs)

A corporation or trust forms to use money from investors to buy, run, and sell properties. Most of these would be income-producing properties like commercial rentals. Some REITs are traded on the stock market others are not.

Real Estate – Which Property Location?

Consider the property location when investing in real estate. How do you interpret the demographics? What locations are the best to invest in real estate? What properties – residential, commercial, industrial, or vacant land?

Buying real estate is complicated and stressful when you start. Should you stay in your home state? Home county? when purchasing real estate? Beginners often do.