One of the world’s most profitable investment options is real estate. But not everyone has the financial means to purchase a home entirely. Fortunately, there are other avenues for real estate investment, such as purchasing real estate stock. As a result, investors can own a portion of a property without bearing the whole cost of ownership.
Purchasing real estate shares is very similar to purchasing stocks in a corporation. Shares of a real estate mutual fund or a real estate investment trust (REIT) can be bought by investors. Companies that own, manage, or finance buildings that generate income are known as REITs. They are extremely appealing to investors looking for stable income streams because they must distribute at least 90% of their taxable income to owners.
There are two widely used guidelines that real estate investors follow when assessing possible properties. The first is the “2% rule,” according to which the monthly rent on a rental property must be at least 2% of the purchase price. For instance, a $100,000 property should bring in at least $2,000 per month in rent.
The second guideline is known as the “1% rule,” which specifies that the rent on a rental home must be at least 1% of the purchase price per month. This indicates that the property should bring in at least $1,000 per month in rent, using the identical scenario as earlier.
A well-known internet marketplace for purchasing and selling single-family rental homes is called Roofstock. They are not the only competitor in the market, though. Redfin, Opendoor, and Zillow are some further rivals.
It is possible to become a millionaire through real estate investing, but it takes a combination of wise financial decisions, diligent labor, and a little bit of luck. One tactic is to concentrate on investment properties that produce consistent rental revenue. Searching for undervalued properties that can be bought at a discount and then sold for a profit is another tactic. When investing in real estate, it’s crucial to do your homework, have a sound plan for your money, and practice discipline.