If one of your 2020 goals is to earn more money, then you might be looking toward investing as a financial strategy. There are plenty of options out there about what you can invest in, but real estate has proven to be a lucrative choice. You can earn a good deal of money investing in real estate, but if you are not careful and pragmatic with your decisions, you could end up losing a lot. Below are three smart, research-backed ways to invest in real estate this year that can help you develop your investment portfolio.
Real Estate Investment Trusts
If you are looking for a low-risk real estate investment, then consider real estate investment trusts (REITs). These act as mutual funds consisting of individual properties and multiple investors. REITs typically specialize in commercial spaces such as office buildings, shopping malls, hospitals, warehouses, and storage facilities. Investing in a REIT is a great way for you to own property without putting down enormous amounts of money or being actively involved in the investment or property management.
Flipping houses is a much riskier investment method; however if done right can provide you with huge profits. The practice of flipping houses is relatively simple in theory: Buy a new home, repair it, and then sell it for more than what you bought it for and more than the total renovation costs. The process can become more laborious and complicated if you purchase a real fixer-upper. Ideally, you would want to find a low-cost home that doesn’t need too many repairs done so that you are not spending a fortune just to resell it. And remember to keep in mind that just because you renovated a house doesn’t mean it will sell any better than it did before. The state of the economy and housing market matter a lot in flipping homes.
When searching for a new home to flip, consider mountain property. This property type could easily become a luxury home. Mountain cabins or mountain homes already offer a scenic location filled with mountain views and lush national forests. Purchasing a mountain cabin and turning it into an idyllic mountain retreat could prove to be a lucrative venture, especially if you market the dwelling to ski enthusiasts and nature lovers.
Renting Out Property
Another great option for investing in property this year is providing short-term rentals. If you have a single-family home with an accessory dwelling unit (ADU) such as backyard cottages or attic apartments, you can offer this space to potential renters. If your existing residence isn’t set up to accommodate an ADU, then no worries! Levi Construction can help you modify your home in order to offer an accessory structure. They provide adu los angeles services such as building granny flats, in-law units, detached ADUs, converted garages, or even transforming part of the primary residence into an ADU. It would be preferable for both the tenants and you as the homeowners for the ADU to have its own entrance separate from the main house to maintain privacy; however, you will still want your tenants to have easy access to the primary dwelling.
By renting out a portion of your property, you will be able to manage tenants easier and understand what it’s like to be a landlord without making a large investment. You will often find a single-family home with a detached ADU in bigger, metropolitan areas like Los Angeles County. Rent and housing is often expensive in larger cities, especially in Los Angeles, so by having a granny flat or similar ADU, homeowners can earn money from their property and provide affordable housing to prospective renters.