Buying a property and renting it out isn't the only way to invest in real estate. There are several different types of property investments. Three of the most common investments are:
Basic Rental Properties
The most well-known way of investing in real estate is to buy properties and rent them out to tenants. You, as the owner, pay the taxes, mortgage, and maintenance costs. New investors often think they should charge more rent than what they need to cover those expenses in order to make a profit. However, most investors only ask for enough rent to pay those costs and wait to profit once the mortgage is paid.
REITs, or real estate investment trust, operate similarly to stocks. Investors supply a corporation with the funds to invest in and manage properties. In return, the corporation pays out 90% of profits as dividends to investors. Just like stocks, REITs are bought on the major exchanges.
Real Estate Investment Groups
Owning basic rental properties comes with responsibilities because you're the landlord of those homes. If you don't want the responsibilities a landlord has, real estate investment groups are another option for investment. How it works is a company will buy or build a set of units such as condos or a group of apartments, then open them up for investors. You can invest in one or more of the units they have available. The company handles the mortgage, taxes, and maintenance costs and keep a percentage of the monthly rent.
There are several ways to invest in Kansas City properties that you should be aware of before buying a home. Basic rental properties are the first and sometimes only thing people think of when it comes to property investment. However, you have other investment options like REITs and investment groups that take the burden of being a landlord off your shoulders.
Simple Ways to Invest in Real Estate
Different Types of Real Estate Investments You Can Make