President Franklin D. Roosevelt once said, “Real estate is about the safest investment in the world,” and even today, this quote holds much truth for investors. Real estate investment and development is not easy but it’s often one of the most stable investment opportunities available today, and can mean high returns when the market performs well, and reliable returns even when the market is down. Many investors are looking to diversify their portfolios with real estate, but that diversification can be handled in two very different ways – investment and development. In this article, we focus on investing. So, how does real estate investing work?
How Does Real Estate Investing Work?
Real estate investment means different things to different investors. For many, buying a property with the intent to lease it to tenants and collect a fairly passive income is the definition of investing in real estate, but there are many other options within this investment category.
Land Speculation
When it comes to real estate investment and development, land speculation is a pretty good option, depending. In this case, an investor purchases a piece of land with the intent of either reselling the entire piece of land or parting it out to buyers. It can be fairly risky, but if you understand the market and what benefits a given piece of land holds in that market, it could mean fairly high returns.
Flipping
Another form of real estate investment is property flipping. In this scenario, an investor purchases a piece of property, renovates it, then sells it at a fairly high price. The difficulty with this method of investment is that investors either need to be construction professionals or work with a dedicated team to ensure renovations happen on time and on budget.
Real Estate Syndication
Real Estate Syndication is one of the best ways for high net worth investors to get into real estate investing without having to go through the hassles of purchasing specific properties themselves. Syndication is when you (as the investor) pool your money with other real estate investors to purchase a property. In this case, you would be what is known as the “passive investor”. The passive investors finance the deals, and the syndicators, also referred to as “General Partners” are the ones who do the due diligence. We underwrite the deals, negotiate with the sellers, manage the property or work with the property management team, and communicate everything to the passive investors. The unsung hero of Real Estate Syndication is the tax benefit. Investors are able to take advantage of this through their K-1 filing.
Reach Out Today
Strength and stability. It’s what you want in a real estate investment firm, and it’s exactly what we provide to every investor looking into both real estate investment and development. Our experience means a finely tuned strategy that is the ideal way to build your portfolio. To learn more about how we can help, contact us today.
