Planning for a real estate investment could be of great advantage and could serve as good savings for the future. You could buy a property and lease it out so that you can earn a particular amount of money every month from the invested property.
However, read on to find out various options to invest and make a return in real estate.
Traditional/Conventional Investment Model
One of the easy methods for real estate investment would be to purchase an asset and rent it out. The process sounds simple but would need a huge investment right in the beginning. It would involve early maintenance and upkeep costs. You should make sure that the asset is free from any legal hassles and buy it upfront or with help of a loan. If you are planning to purchase a commercial property you should get the necessary registrations done and make sure that all the papers are clear.
Once you buy the property, you could spread the word about the vacancy in the market. The tenant should accept and sign the lease agreement and then agree with the monthly rentals which would be your passive income from the property. It is indeed a good idea to have tenants overlapping lease periods so that the property never remains fully vacant. It would help in paying the timely maintenance costs as well. You could even get a property management firm to handle all the tasks for you. However, you should pay commission charges to them.
If it is a residential property, once you purchase the property, you should draft a rental agreement for every tenant and the return from the investment would be measured through the monthly rent that is received from the property.
Renting out a Portion of your Existing Property
In your current house, if one floor lies unused, it would be a good idea to rent it out. However, you should deal with the extra traffic that is generated. If you have rented out the portion to a business, based on the product or service they offer, the conditions should not be conducive for living in the same place. All the terms and conditions you have should be put out in the rental agreement so that there is no confusion in the future.
Investing in Real Estate via Mutual Funds ETFs, REITs
All three of them are not the same but they could be clubbed into a similar category. Exchange-traded funds (ETF) and mutual funds could be bought that are themselves invested in real estate. You could buy ETFs that invest in real estate stock like publicly-traded home builders. Some ETFs invest in real estate investment trust (REIT) as well. You could find mutual funds that are invested in real estate developers and property management firms. While ETFs are managed by a fund manager, mutual funds are actively managed.