Various Ways of Investing in the Real Estate
While purchasing a property and renting it out is the most common method of investing in real estate, however, there is a wider range of investing approaches that an investor could potentially benefit from depending on their time frame and risk tolerance. Below you can see some available options that are for education purposes. As always, seeking solid advice from a professional licensed expert would be highly recommended before making any investment decisions.
- Private lending. A simple way of obtaining a relatively high return on investments with low risk, as each investment is secured by the property. You can act as an individual lender who directly deals with borrowers either through a lawyer, a mortgage broker or you can lend money through Mortgage Investment Corporation (MIC) which will manage the investment for you.
- Direct investment in development projects. Yes, you can partner up with builders and developers in small and large projects. Developers are always seeking investors to provide capital for ongoing projects. An investor can be involved in every phase of a development project either through a limited partnership, mortgage syndication, or buying shares of the developers’ corporation.
- Flipping Houses. This is another popular way of investing in real estate. Simply speaking, investors find properties in poor condition that need to be updated or repaired, after having repaired or updated those properties they then sell (or flip) those properties at a higher value than the cost of the purchase and renovations. These are typically short-term investments which yield a higher rate of return. Although these investments do yield more profits for investments, they also come with greater overhead expenses such as contractor fees, realtors’ commissions, land transfer tax, mortgage penalties, fees, and the rising cost in construction materials. Investors should be cautious when seeking fixer-uppers in today’s unstable market as homes in the GTA have seen a 27% spike in prices in the last year. Properties purchased for flipping should be purchased with a fair market price as market correction may drive the prices of homes down in the future.
- REITs (Real Estate Investment Trust) is the preferred method of savvy investors. In a nutshell, REITs can be defined as corporations who pool investor money together and purchase multi-unit properties which they then rent out on a monthly basis. These corporations will manage everything from occupying the rentals with tenants, maintaining the properties, administration and property management. Investors in REITs enjoy all the benefits of hassle-free investing while also receiving Profit Sharing and Yearly Dividends.
Our professional team at MassMortgageGroup.com is ready to help you out with your investment at any stage of the process you are.