Investing in the sector of real estate gives you an opportunity to earn money while building your financial future, but if not careful, it can be an easy way to lose your shirt too. Proper research and commitment to true systems can make you money as there’s a lot of money to be made in real estate.
Due to stable prices, decreasing price of rupee and great deals offered by the property developers, even during pandemic a good amount of traction has been made from the NRIs. In a report it was found that Bengaluru has emerged as the most favourite destination to invest for more than 24% of the NRIs, followed by Pune and then the NCR region. There exist some common ways by which people usually invest in real estate. Depending on your financial situation and what you wish to achieve with it, you can choose any of the methods.
The most common way to make money in the real estate sector is to purchase a property. You can buy a property or multiple properties and rent it to long-term tenants. You could even go for vacation rental properties which can be put out on rent on short-terms or go for commercial properties such as retail or office building.
One of the biggest benefits of this method is that it’s a steady way of generating cash flow. The downside of this method is that if the rental people leave off the repair costs of the damage caused to into your earned profits.
Real estate investment trust
A real estate investment trust or REIT is a special kind of organisation that is designed to invest in real estate assets. You can think of a REIT as a sort of mutual fund for real estate sector investment. In this money of various investors is pooled together to buy a portfolio of commercial properties or any other real estate assets. Many of the REITs are even traded in the stock market which is easy to buy and sell, it helps to make better choices for the investors at beginner level and the ones who have limited capital to invest in.
A wholesaler in the real estate sector is just like a normal wholesaler who acts as a middleman between potential home sellers and real estate investors. The role of a real estate wholesaler is to find out a cheap property according to the investor’s needs, then a contract is made to buy the property with the investor. The difference made her is the profit margin of the wholesaler.
Unlike other real estate investing methods, the process of wholesaling is a more time-consuming job that has several rules and regulations to know.
Crowdfunding today is relatively a new form of real estate investing. In this process when a professional investor identifies an opportunity to build or purchase a commercial asset in real estate, they may choose to raise some funds or capital from different individual investors. An example for it can be, a group of individual investors who aims to buy a shopping complex, he initially spends on the renovation work and later on sells it at profit.
Real estate crowdfunding takes place on different platforms that provide a marketplace where interested investors can join. Here not all investors are allowed, many are reserved for accredited investors.
House flipping is a lucrative form the real estate investing which involves taking down a running property and fixing all its repairs or renovations, and after that selling it at a good profit margin. Although this house flipping seems an easy task to do, but it really requires a ton of effort and knowledge to convert into profit. You always have to be prepared for unexpected problems like budget issues, time mistakes, timelines, and issues while selling in the market.
Just the way you invest in mutual funds, equity funds work by pooling the money together from a variety of investors to invest in a property. Unlike REITs or trusts, these funds are allocated only for accredited investors who already have a lot of money in hand to start investment.
Real estate limited partnerships
A real estate limited partnership or RELP is a method that provides investors with a diversified portfolio of various opportunities for real estate investment. It allows you to merge your funds with other investors who are interested to buy, sell, or build properties that might be hard to manage for them. Just like REITs, RELPs also have a pool of properties, all it differs is in their structure and organisation.
Given all the benefits that real estate investment gives, the investment of NRIs in real estate in India can be one of the best investment tools. All it would need is an understanding of how the industry works and the expectations of you out of that investment. For NRIs sometimes it can be an issue to come all along to India and invest in real estate, this issue can be resolved with the help of a Power of Attorney (POA). A POA can carry out all the investments and their procedures for you in India. He is enabled to buy a property, manage it, and sell it as well easily in India, however, you have to take certain precautions while getting the perfect power of attorney for you.