There is a standard misconception that land investing requires property ownership. It’s understandable to presume that the sole way to invest in land is thru direct real estate. But in fact, there are many land investment opportunities that don’t involve property ownership, offering lucrative, steady cash flows and much less maintenance from an investor.
With these options, investors can access the various benefits of land, including rent from the property’s tenants, appreciation potential, and diversification into an alternate, but tested asset class. All without the continued responsibilities of building maintenance, landlord, and also other obligations of property owners.
In this article, we discuss five alternative ways you'll invest in land that doesn’t involve direct property ownership. These methods of land investment open up many various options for individual investors. Who aren’t ready or willing to plan to an outsized deposit or secure an outsized loan for one property. Investors who prefer to invest outside of direct property ownership enjoy the choices of investing across multiple locations, property sizes, and classes of land.
These methods of investing can function as a precursor to future property-owning investments, otherwise. You may find returns from these investments compelling and avoid the hands-on approach of real estate investments altogether.
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1. REITs (Real Estate Investment Trust)
According to a recent survey, India’s REIT market is predicted to develop to $20 billion by 2020. Which makes investing in REITs an excellent idea. REITs invest inland projects, mostly commercial properties. A bit like ETFs, REITs trade on stock exchanges. And an investor can easily purchase or sell REITs from the listings on the stock exchange. With initial investments ranging from INR 2,00,000, you'll invest in REITs and earn returns between 8-14%. The risks are quite minimum as REITs are comparatively less volatile than the stock exchange, mutual funds, and gold.
2. Online Investment Platforms
Online land investment platforms pool funds from several investors and invest on their behalf in opportunities that otherwise would be expensive to explore. These range widely in terms of investment offerings, real estate types, and investment minimums. With attention to both residential and commercial land, the web platforms provide the investors access to take a position during a single real estate or a diversified portfolio of land. However, the medium is best fitted to those that can afford to go away their investments uninterrupted for an extended period of your time.
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4. Wholesaling
Wholesaling is that the only active sort of land investing that doesn't require property ownership. Instead, it requires the intent of property ownership. Wholesaling may be a sort of property-flipping where an investor signs a contract to shop for a property. That they believe is underpriced then quickly sells it to a distinct investor at a better price for a profit. Most frequently, wholesalers look for homes in need of renovations and sell them to house-flippers who want to renovate the house. However, they'll also hunt down homes that they believe will sell quickly to regular homebuyers during a particular housing market.
In a wholesale investment, a wholesaler signs a contract to shop for a home and produces an earnest-money deposit. They then attempt to sell the house as quickly as possible to a house-flipper or homebuyer at a premium. In essence, a wholesaler earns a finder’s fee for brokering the sale of a home between the vendor and buyer. Unlike a standard broker, a wholesaler uses their position as a buyer with a contract to get the house to broker the deal. Unlike a passive investor, a wholesaler bears an excellent deal of responsibility in ensuring the success of an investment. If a wholesaler has difficulty finding a buyer quickly. They risk decline their return, earning no return, or worse, losing money on the investment.
5. Flipping houses
Flipping houses involves buying a property, repair it (if required), and reselling it for a profit. To urge high profits, investors buy properties that provide a lower-than-market price or belong to owners in dire need of money. After the occupation of the property, the investors immediately start trying to find prospective buyers by advertising the property listing. Flipping houses requires extensive knowledge of land property types, values, and therefore the market. An experienced investor flips multiple properties without wasting any time and is usually on the lookout for suitable properties to shop for.
Which Option is correct for You?
If your interests don’t dwell buying a rental property and becoming a landlord or knowledgeable land investor. There are many other ways to feature land in your portfolio. When chosen and managed wisely the important real estate investment options. We’ve outlined here offer potentially significant returns and valuable asset class diversification — without the effort of tenant troubles, evictions, foreclosures, mortgages, and more. However you select to take a position, it's important to assess the time commitments of every option, gauge the cash and a spotlight you've got available to devote to an investment, and determine which option most closely fits your personal preferences and financial goals.
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1 Comments
It was really informative. Thank a lot
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