The real estate industry offers a lot of investment opportunities, especially in a place like Los Angeles, and many of us already take advantage of them. The City of Angels has many developed and undeveloped properties, ripe for the taking. However, is it the right place to invest your money and expect good returns?
The city of more than ten million residents has demands for housing, whether for commercial or residential purposes, so investing in properties is the right move. Fortunately, you don’t need to buy lots of houses to start; an ideal investment may be something as simple as flipping houses.
In this article, we will look at some real estate investments that have good ROIs, even if you start small. You can also follow this link: https://www.wallstreetmojo.com/ to learn more if you’re a beginner.
1. Start with Your House
One of the easiest ways to invest in real estate is to invest in your house. That means taking a mortgage on the house and paying it back until you build ownership. The mortgage you take can go toward another investment in the same industry.
Depending on the amount, consider leasing a property for short-term rentals or buying a smaller house. A second option is to go into flipping houses to make a profit.
Another way to invest in your home is to use the mortgage to renovate the house. There are so many adjustments to make when you want to increase its market value, such as adding living spaces, building a garage where there was none, and remodeling the kitchen or bathroom. But before taking the step of starting with your home, you must be aware of the true value.
In some areas, the increase in value is not very significant – only about 4%. A few areas have excellent value increments, but not all of us can live in those areas. It helps to understand that there might not be a dramatic increase in the house’s value, so proper research is important before taking the leap.
2. Using Crowdfunding Platforms
Another way to invest in real estate is to use a crowdfunding real estate platform. These platforms are viable and credible means to ensure you get the best results. They allow you to invest your money in specific and detailed long-term projects with many other investors. It’s like pooling resources together to fund a large-scale project and get returns in a few years.
While they usually offer long-term investment avenues, you can still withdraw some of your money before the expiration of the agreed time. However, there may be penalties for early withdrawal. Also, there may be fees and management costs that affect how much you finally get.
Therefore, carefully research to determine which platforms work best for your needs. In addition, check your eligibility before picking a platform.
Many have minimum amounts for investments, some as low as $500 and others as high as $20,000. You may even be required to be an accredited investor, which means you need to have at least one million dollars in assets.
The assets can’t include your home; they must be independent of such properties. Otherwise, you must earn at least $200,000 per annum. You can click here to understand real estate crowdfunding if it’s new to you.
3. Check Out Rental Properties
Investing in rental properties is usually one of the best ways to make money in real estate. It’s capital-intensive but worth it in the long run. So, if you have a lot of money to spend, consider going this route.
You’ll get regular income from the properties and may even see the properties appreciate over the years. Keep in mind all the aspects of such an investment before committing to it.
For example, there are two main ways to make an income from rental properties. You can choose a short-term deal, which means the properties work well for people with short-term accommodation needs. A good example is Airbnb or a motel, which can bring in quick money, though it also has its downsides.
Alternatively, you can go for a long-term deal, which means your rentals will be for regular leases, such as apartment renting. The shortest time for a lease in long-term rentals is one year, so the rents should be yearly. However, some leases allow for monthly rents, making it possible to have steady monthly income.
Note that such income will change your tax bracket, meaning you will go a step higher on the ladder. There are incentives for people in that bracket, but you must understand how that affects your income in the long run.
Hire a real estate tax accountant or specialist to help you navigate the intricacies of your tax returns if you’re unsure about how it works. You can visit Advise RE Tax to see how you can make the most of your tax payments without overpaying. A real estate accountant can also provide valuable advice on the financial aspect of investing in the industry. Using the services of such an expert saves you in more ways than one.
Conclusion
Investing in real estate is rewarding, especially if you’re not looking for immediate compensation. But when investing in physical properties, remember that the risks are high, especially when you consider the relatively volatile market. Therefore, keep an open mind and be aware of the dangers before putting your money into it.
If you have only a small amount to spare, go for real estate investment trusts (REITs). They are not capital intensive, and you receive dividends from time to time.
Moreover, you don’t have to worry about the hassles associated with these investments; the company does all the worrying. Yours is to receive the dividends.
