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Top 5 Smart Ways to Invest in Real Estate

Top 5 Smart Ways to Invest in Real Estate
by John Carlucci - June 29, 2022

Real estate investing is growing more and more popular and comes with its benefits. For example, properties increase in value over time, allowing you to sell them for a higher price. In addition, real estate can provide monthly income through rent. So, if you want to make extra cash, real estate investment might be the right thing for you.

The following article will share with you a few simple, yet smart ways to invest in real estate and build your way towards wealth. Let’s get started! 

Consider Getting a DSCR Loan

The Debt Service Coverage Ratio (DSCR) gives you the option of receiving a loan based on cash flow from your investment property rather than personal income. DSCR loans can be utilized to finance either residential or commercial properties. Before applying for this kind of loan you need to calculate your DSCR, by yourself or by using an online calculator.

To qualify for a DSCR mortgage loan, the real estate investor should have a DSCR of 1.25. There are several major advantages to DSCR loans, compared to conventional ones; the lender won’t require your income verification, there is a quicker closing time and no limit on the number of properties, and the loan amount can go as high as $4 million, and the best of all, DSCR loans are available for both new and experienced real estate investors. 

Invest in Rental Properties

A rental property is any property that is rented out to tenants. This can include everything from an apartment complex to a single-family home. Landlords typically enter into rental agreements with tenants, which outline the terms of the lease. The length of the rental agreement can vary, but most leases are for 12 months or sooner.

Rental properties can be a great investment for investors looking to generate income. However, there are also some risks involved. For example, if a tenant damages the property or stops paying rent, the landlord may be responsible for repairs and eviction. No matter those risks involved, under normal circumstances, rental properties are a great additional source of income that real estate investors should look at.

Flipping Investment Properties

The goal is to buy properties below the normal market value, improve them, and sell them once again to make a profit. The first step is to find a suitable property, by yourself, on a platform, or from an agency. After that, you’ll do all the necessary repairments, and finally, put the property up for sale once again, but this time, for a bigger price. 

As with any purchase, there are several major risks involved, including the loss of money. If you oversee some necessary repairments, or you forget to add them to your expenses, you can easily make the mistake of buying a property that won’t bring you good income. Always do your research beforehand, and think twice before purchasing any property.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts, or REITs, are a type of investment vehicle that allows investors to pool their money together to invest in income-producing real estate. REITs can be used to invest in a variety of real estate assets, such as office buildings, shopping malls, apartments, warehouses, and hotels. 

Those investment funds offer investors several advantages, including the ability to diversify their portfolio, high dividend yields, and potential for capital appreciation. While there are some risks associated with investing in REITs, such as volatility in the real estate market, they can be a good way to add exposure to real estate to your investment portfolio.

Online Real Estate Platforms

Online real estate platforms are generally safe, digital marketplaces that connect buyers and sellers of property. These platforms typically offer a wide range of services, from listings to financing and closing assistance. Those platforms come with benefits for both the seller and the buyer.

For buyers, these platforms are the place for finding properties that meet their needs. Sellers can reach a larger audience of potential buyers than they would through traditional methods such as print advertising or word-of-mouth. because of the variety of services they offer besides connection, they make the whole experience easier and stress-free for both parties.

Bottom Line

No matter if you’re trying to diversify your portfolio or make a significant income, thanks to digitalization, real estate investing is only one website away from you. You can always practice buying properties or purchasing them for different purposes, such as flipping or renting. If you’re short on cash at any point in your journey, DSCR loans are there to help you out. 

Author

  • John has worked alongside Real Estate Giants across USA and Canada for decades. Since he started Prudentialcal, he has been actively rendering service as business adviser to many companies in the real estate industry. He formed Prudentialcal in hopes of providing the most reliable stories and information there is in the vast industry of real estate

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