If you’ve been thinking about the best way to buy investment property, know that there are many, many options available to you. You can buy a house, renovate it, and then try to sell it for a profit. You could buy some rental property and try to find tenants. Another option is to purchase land itself and then look for ways to profit.
However, your options aren’t limited to these kinds of property investments. You don’t even have to buy a physical piece of property. These days, many investors are content with just owning some shares of real estate on the stock market, real estate mutual funds, REITs, farmland crowd-funding, and so forth.
The best way to buy investment property for you depends on factors such as your risk tolerance level, amount of money you are willing to invest with, experience, whether or not you qualify as an accredited investor, personal goals, the amount of work and time you plan on putting into the property, etc.
Some real estate investors prefer a more hands-on approach, while others don’t want an active role. For example, suppose you’re going to invest in rental property. In that case, there is always the option to hire a property manager to do the more hands-on stuff. However, you will still be the one who is ultimately responsible for everything. Plus, hiring a property manager is even more money you’ll have to spend on the investment. Will the rent money from tenants be enough to make a profit?
Best Way to Buy Investment Property not for Flipping
As far as house flipping goes, it’s not an easy endeavor. It is not the best way to buy investment property for beginners. Many people know that real estate investing doesn’t realize the amount of research and knowledge into the strategy. A great deal of research is required on not just the house and property itself, but the neighborhood, weather, crime rate, and all of the factors that will either attract potential buyers or turn them away.
Since real estate – both residential and commercial – is such a vast industry with many complexities, you might not want to put all of your money into one house or piece of property. However, just as you would diversify your investment portfolio with any other type of investment, so should you with real estate.
The best way to buy investment property and diversify your portfolio is to put some money in Real Estate Investment Trust(s), purchase some stock related to commercial real estate, such as agricultural / farmland commodities, or invest in mutual funds with a real estate focus. To get started with the REITs, DiversyFund is a perfect option. They do a thorough job in selecting profitable properties with growth potential. Moreover, they welcome all types of investors, regardless of whether they are accredited or not.