3 ways to invest in rental properties | Jobs Vox


Milwaukee, Dec. 21, 2022 (GLOBE NEWSWIRE) – Northwest Mutual: While most investors start with stocks and bonds, there are many ways to invest money. As an investor’s skill and comfort level grows, they may branch out into additional asset classes. A popular investment: real estate. Here are three ways that everyday investors can incorporate real estate into their investment strategy.

Find a business partner

A business partner or multiple business partners may be suitable for investors who are unable to purchase an investment property on their own. It can also be useful for investors who fear that putting too much money into a single investment could cause their portfolio to become unbalanced, especially if the money used to buy the property represents a large portion of cash.

The process of buying property with a business partner is no more complicated than buying it alone. However, investors who purchase property with a business partner must take the additional step of clarifying roles, responsibilities and financial decisions within the partnership. What if one partner wants to sell his share of the property? How is the property managed? Should the business be incorporated? How are those decisions made if the property needs major renovations? Investors buying real estate with a partner should clarify these details, preferably in writing, before entering the market.

Buy property alone

Unlike investors who buy rental property as part of a partnership, sole proprietorship real estate investors have full control over their business. This can work well for investors who have enough money to easily buy the property on their own, feel comfortable handling all the investment and logistics aspects, and want to make the final decisions about investment properties.

Investors should take an honest look at their capabilities before buying on their own. Investment property is not as passive as some may believe, and investors should not go into the process thinking that owning a rental property is a hands-off task. Owning and renting a property can require a variety of skills, such as maintenance, repair, tenant relations, organization, marketing, financial management, and tax preparation.

Invest in REITs or other real estate funds

Even investors who don’t have the cash to buy the property outright can take advantage of the real estate market by investing in REITs. A REIT stands for Real Estate Investment Trust, a type of investment that buys and manages rental properties and pays shareholders based on the returns on the rental properties. REITs require much less money upfront than buying the property, and REIT investors don’t have to deal with tenants or maintenance issues.

Real estate mutual funds and real estate ETFs, a collection of several different REITs, can also be purchased if you want to diversify.

Before adding these funds to their portfolios, purchasing a property or investing with a business partner, potential real estate investors may find it helpful to consult a financial advisor to see if they fit with their overall investment strategy.

Source: Northwestern Mutual

Investing in specific sectors such as real estate may be subject to different and greater risks than other investments. Declining real estate prices, economic conditions, property taxes, tax laws and interest rates all pose potential risks to real estate investments.

Contact Address:
Don Klein
Assistant Director – Field and National Public Relations
[email protected]

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