5 Reasons Why Real Estate Can Be Your Solution in 2021

Source: Francesca Tosolini

The impact of the COVID-19 on the economy of the entire world shows that you need to find a way to invest your money so you never suffer great losses. A great way to do this is by investing in the real estate market. The real estate sector is gearing up for a post-pandemic boom. With sales, demand, and prices skyrocketing, it’s a good idea to plan towards investing in real estate in 2021.

When considering making a real estate investment, you need to know the reasons for taking that step. You need to know the options you have before making your move. These are 5 great reasons why real estate could be your financial solution in 2021.

Fix and Flip

This term has gained popularity through reality TV shows. It is also commonly known as house flipping. “Fix and flip” is used to describe the buying of outdated homes at low prices by a real estate investor. The investor then renovates the home and sells it to another buyer at a higher price. Experts predict that house flipping will yield a lot of profit during the course of 2021.

If you’re looking to make a lot of money within a short period, the fix and flip strategy is quite effective. However, it is also possible to suffer huge losses if it isn’t done properly. It is important to do proper research and get the relevant knowledge to ensure your success.

Wholesaling

Real estate wholesaling is a great option if you’re looking to have faster turnaround times in your deals. Wholesaling involves an investor searching for homes that could be sold for less than their normal value. When the necessary purchase contract details are settled and signed with the seller, the investor looks for an end-buyer to whom he gives the contract, but at a higher price. The wholesaler (investor) will take the difference as his share, while the original seller is paid the amount agreed upon.

If you want to go into real estate wholesaling, you need to understand the laws that apply in the area of interest. In some jurisdictions, only licensed agents can be paid commission in deals concerning real estate.

Buy and Hold

This is exactly as the name implies. Buy and hold involves an investor acquiring real estate property and holding on to it for an extended period of time. The reason for this is simple – appreciation. The investor waits for an increase in the property’s market value, so it can be sold for a return on investment (ROI). Renting out the property while “holding” could also help generate income to cover recurring expenses. Experts in thesis or dissertation help say this is a very popular strategy among middle-age students.

With studies showing that home prices are expected to increase in 2021, buying and holding is a great idea. If you’re considering this, it’s best to make sure you invest in a location where appreciation and income gain are highly likely.

Rental Properties

Rental properties are a great way to enter the real estate investment market. This is a long-term type of investment in which an investor buys homes and then rents them out. If you rent the home out at a rate that is greater than what it costs to maintain the property, you are set to enjoy good profits from this strategy. It is almost a given for the property to appreciate as time goes on, and you can even purchase more properties by leveraging its equity.

The major obstacle to acquiring this kind of property is that you may need huge capital to purchase it. However, you could consider meeting lenders who could assist you.

Real Estate Investment Trusts (REITs)

Sometimes, you don’t need to actually own property physically to go into real estate investment, and REITs are a perfect way to do that. The main function of REITs is to make profit through proper management of real estate properties. You could invest in such firms and gain partial ownership through investing in their shares. This way, you can get income from the shares as well as sales profit.

Owning actual physical property is a much bigger risk than buying shares in REITs. However, the profits from REITs are much smaller, and the cost of investment may be higher.

The Bottom Line

There are a lot of reasons to go into the real estate sector. As a prospective real estate investor, you need to be mindful of your objectives and budget. Do your research, study the market and make your choices wisely.

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