When considering real estate investment, a residential property might be the first thing that comes to mind. However, real estate investors have a plethora of investment options beyond physical assets. Over the past half-century, real estate has been a favored investment vehicle. In this article, we will explore some top choices for individual investors and the compelling reasons to consider investing in real estate.

Start investing smart with HOUSIFY. HOUSIFY has listings worldwide and makes it easier for investors to make decisions and find out about new investment opportunities.

Historical Price Trends Real estate has been a stable investment for a good reason. Before 2007, historical housing data indicated that property prices would keep climbing. Barring a few exceptions, the average sale price of a home in the United States increased annually between 1963 and 2007 until the Great Recession hit. Home prices dipped briefly during the spring of 2020 due to the COVID-19 pandemic, but as vaccines rolled out and pandemic fears subsided, property prices skyrocketed, reaching record highs by 2022.

Rental Real Estate Investing in rental properties turns you into a landlord, a role you should evaluate your comfort in taking on. As a landlord, you will be responsible for covering the mortgage, property taxes, and insurance, maintaining the property, finding tenants, and handling any issues that arise. Being a landlord can be a hands-on investment, especially if you do not employ a property manager. Depending on your situation, managing the property and tenants could be a round-the-clock job, but by carefully choosing properties and tenants, you can minimize the likelihood of significant problems.

House Flipping: House flippers, like day traders, differ from buy-and-hold investors. They purchase properties with the intention of holding them for a short period, usually three to four months, before quickly selling them for profit. There are two primary methods to flip a house: renovate and resell, or buy and hold. Both approaches come with risks, but if executed correctly, flipping can be a lucrative way to invest in real estate.

Real Estate Investment Trusts (REITs): A REIT is a company or trust created to buy, operate, and sell income-producing properties using investor funds. Traded on major exchanges like stocks and exchange-traded funds (ETFs), REITs offer consistent income and capital appreciation opportunities. By investing in a variety of property types, REITs provide liquidity compared to other real estate investments.

Real Estate Investment Groups (REIGs): REIGs are similar to small mutual funds that invest in rental properties. If you want to own a rental property without the hassles of being a landlord, an REIG could be the solution. The company that operates the investment group manages the properties, handles maintenance, advertising, and tenant placement in exchange for a portion of the monthly rent.

Real Estate Limited Partnerships: (RELPs) RELPs are similar to REITs, formed to purchase and hold a portfolio of properties or sometimes just one. However, RELPs have a limited lifespan. General partners with real estate management or development expertise manage the properties, while outside investors provide funds in exchange for a share in the company as limited partners.

Real Estate Mutual Funds: Real estate mutual funds primarily invest in REITs and REIT-operating companies. These funds offer diversified exposure to real estate with a relatively small investment. Like REITs, real estate mutual funds are fairly liquid and provide investors with research and analytical materials, helping optimize returns.

Conclusion: diverse real estate investing methods can provide a range of opportunities for investors with different risk tolerances, time commitments, and financial goals. By carefully researching and selecting the most suitable strategy, you can maximize the potential benefits of your investment while minimizing potential drawbacks. As with any investment, it's essential to set realistic expectations, conduct thorough due diligence, and be prepared for the various challenges and responsibilities associated with real estate investing. By doing so, you can create a well-rounded and profitable investment portfolio that contributes to your overall financial success.

Start investing smart with HOUSIFY. HOUSIFY has listings worldwide and makes it easier for investors to make decisions and find out about new investment opportunities.