There are many different real estate companies based on the stock market where everyone can invest. Real estate companies invest primarily in shopping centers and then leases them out to companies. This way you do not have to worry about your real estate and you only have to make a choice in which companies you want to invest. You can make a visit to https://www.findnctrianglehomes.com/ for a perfect choice in real estate works.
The advantage of this is that you have to spend much less time on it and that you can sell your shares much faster. The disadvantage is that you are not the direct owner of the property and that you cannot use a mortgage. It is, therefore, a lot harder to invest with more money than you actually own.
Invest in investment funds
Can’t choose which real estate companies you want to invest in? Then you can also choose to invest in an investment fund. An investment fund already makes the selection for you in which real estate companies you invest and all you have to do is transfer your money to the fund.
Are you not yet completely familiar with what an investment fund is? Then go to the article Investing in investment funds and find out everything about it. The advantage of an investment fund is that your portfolio is much better spread, but how do you pay for certain costs. Real estate investment funds usually also invest in ‘REITS’. See below what that means and how you can invest in it yourself.
REIT stands for Real Estate Investment Trust. You can see it as a sort of investment fund, but the money that is invested in it is invested largely in real estate. The difference between a REIT and an investment fund is that a REIT qualifies for a different tax form. A REIT does not have to pay corporation tax if it pays at least 90% of its profit to its shareholders.
From a technical point of view, a REIT is therefore much more interesting, because there is no need to pay corporation tax and only a dividend tax. It is possible to invest in a listed REIT, a REIT in the form of an investment fund or a private REIT. 2 examples of listed REITs are: ‘Government Properties Income Trust’ and ‘EPR properties’.
Risks in real estate
Since every form of investing entails risk, this is also the case with investing in real estate. You can compare the risk that investing in real estate companies, investment funds and REITs with investing in shares. Real estate has slightly fewer fluctuations in value, which means it is slightly less risky.
Trading in real estate and renting out real estate, on the other hand, is a different story. Most landlords buy a house with a mortgage. This means that you invest with money that is not yours. So if something happens to the house or your financial situation, it is possible that you will lose all your money.
You can of course also reduce this risk by taking out a much smaller mortgage or even no mortgage, but the return you make is a lot smaller.