Ways to invest in real estate

Investing in real estate can be a great way to make some big bucks, if you do it right. It will take time and some cash to get going, but it is definitely possible. You have to be smart about what you invest in and get educated. Read up on what you have to do to get going and once you do, it can be a profitable business for you.

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Just like stocks, there is always risk involved with investing. Is the risk worth the reward? Well, here are some ways it can be.

Rental Properties and Flipping: Ever want to be a landlord? Find a house reasonably cheap and that doesn't need too much work done to it. Make the needed upgrades and find some people to rent it out. If you don’t want to deal with renters, try putting it back on the market. These two ways are most popular in real estate investing.

Flipping can also be called “trading”. Usually the time frame of owning a property that you’re going to flip is three to four 

months. The trick is to land a house that is extremely undervalued or is in a “hot” market. Also, “flippers” can purchase a property at a fairly reasonable price and add upgrades to the house. These take more time and rely heavily on increases in the real estate market in that certain area. 

REITs (Real Estate Investment Trusts: A corporation (or trust) will do this when they use investors’ money to purchase properties for income. They are bought like stock, on major exchanges. In order to keep the status of a REIT, the corporation must pay out 90% of its taxable profits in the form of dividends. This avoids the REIT from paying corporate income tax.

Real Estate Investment Groups: These are a lot like smaller mutual funds. This can be an alternative for you if you do not feel like having the responsibilities of a landlord but you want to be involved. A company will buy a strip of apartments or condos and then investors will buy them through their company. You’re essentially becoming a part of their “group”, but you will have to share some of the monthly rent with the group.