Buying and owning real estate is an investment strategy that can be both satisfying and lucrative. It has long been one of investors’ favorite asset classes, and it’s an especially attractive option in the current economic and technological climate. When investing in real estate, you have many options to choose from.

Everyday investors are no longer limited to only single-family homes or small multifamily buildings. Now they can access a wide variety of investments such as: apartment complexes, commercial properties, real estate investment trusts (REITs), and more are all available.

In this blog we’re going to discuss some of the different ways you can invest in real estate and the benefits of each. Then we are going to hone in on why investing in real estate with Black Girls Buy Houses can be a wise choice for you.

First, let’s answer a basic question.

Why Should I Add Real Estate to My Portfolio?

Real estate is a distinct asset class that many experts agree should be a part of a well-diversified portfolio. This is because real estate does not usually closely correlate with stocks, bonds, or commodities. Real estate investments can also produce income from rents or mortgage payments in addition to the potential for capital gains.

Investing in real estate can be either direct or indirect. A direct real estate investment involves you actually owning and managing properties. Whereas with indirect real estate you join pooled vehicles that own and manage properties and earn passive income.

Now let’s take a look at some of the ways you can invest in real estate.

Rental Property

Owning rental properties can be a great opportunity to create passive income. It’s especially attractive for individuals who have do-it-yourself (DIY) renovation skills and the patience to manage tenants. However, this strategy does require substantial capital to finance upfront maintenance costs and to cover vacant months, so it’s not without risk.

Owning rental property can provide you with regular income and comes with many tax-deductible expenses. On the other hand, managing tenants can be tedious and time consuming. And, you have to contend with potential damage property from tenants and reduced income from potential vacancies. You can consider hiring a property management company to take care of this aspect, but the costs and fees they charge have to make sense when looking at the overall profit you make each month from this type of investment.

House Flipping

House flipping is when someone buys a property, holds onto it for a short time, and then sells it for a higher price. You’re buying a home as a real estate investment, speculating in it as you would a stock.

Sometimes, flipping a house means you take a fixer-upper and renovate it to make it market-ready; other times, it means just holding the property until you can sell it for more than you paid for it. This kind of flipper makes money by buying reasonably priced properties and adding value by renovating them.

Either way, the goal is to buy low and sell high, earning a profit in a relatively short amount of time. House flipping requires capital and the ability to do, or oversee, repairs as needed. There are also tax concerns over capital gains, which mean you want to consult with a tax professional as well.

Real Estate Investment Groups (REIGs)

Real estate investment groups (REIGs) are ideal for people who want to own rental real estate without the hassles of running it. Investing in REIGs requires a capital cushion and access to financing.

REIGs are like small mutual funds that invest in rental properties. In a typical real estate investment group, a company buys or builds a set of apartment blocks or condos, then allows investors to purchase them through the company, thereby joining the group.

A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all of the units, handling maintenance, advertising vacancies, and interviewing tenants. In exchange for conducting these management tasks, the company takes a percentage of the monthly rent.

Apartment Syndication

Apartment Syndication is the pooling of money from numerous investors that is used to buy an apartment building and execute the project’s business plan. It is used when buying large apartment buildings or communities that would be difficult or impossible for individual investors to purchase on their own. It allows companies like mine to pool our resources with others and share risks and returns.

The major investor benefit of apartment syndication is that, unlike investing in the stock market, it provides a low risk, stable, and predictable return on investment. A lot of people would love to benefit from owning an appreciating asset, like an apartment complex, that provides passive income cash flow and a fixed rate of return. However, very few people have the ability to purchase a big apartment complex on their own.

Only qualified potential investors and accredited investors are permitted to passively invest in real estate deals as limited partners in apartment syndications. An accredited Investor is a person with a passive income and annual income of at least $200,000, or $300,000 for joint income and passive income, for the last two years or an individual with a net worth quarterly basis exceeding $1 million.

Real Estate Investment Trusts (REITs)

real estate investment trust (REIT) is for investors who want to diversify their investment portfolio without a traditional real estate transaction. A REIT is created when a corporation (or trust) uses investors’ money to purchase and operate income properties. Like any other stock, REITs are bought and sold on the major exchanges.

Like regular dividend-paying stocks, REITs are a fairly sound investment for stock market investors who want regular income. REITs provide investors entry into nonresidential investments, such as malls or office buildings, that are generally not feasible for individual investors to purchase directly.

REITs are highly liquid because they are exchange-traded trusts. In other words, you won’t need a real estate agent and a title transfer to help you cash out your investment. In practice, REITs are a more formalized version of a real estate investment group.

Why Invest With Us?

Black Girls Buy Houses is more than just a typical investor group. We are both like other investors and very different at the same time.

Like other investor groups, we can offer you a wide range of property investment opportunities from single and multi-family homes up to large-scale apartment syndication deals to choose from. So whether you’re looking to buy and flip a property quickly or invest in a property that provides a longer-term stable return on investment, we can work with you.

At the same time, we care deeply about community and are committed to helping address the affordable housing crisis in America. We are involved with off-market property investing because we have a passion for helping people and can provide creative solutions for homeowners who need to move on from their homes, as well as provide high-quality housing for those who can least afford it.

Connected to community building, Black Girls Buy Houses also has a focus on multi-family dwellings and apartment syndication investing as a way for us to help boost the stock of affordable housing.

So, whatever your goals and type of investing in real estate you’re interested in, we would love to work together to make it come true for you!

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