By KILUNDO MBITHI
There are unlimited investment fronts to consider but real estate is one of the oldest wealth creators which continues to manufacture millionaires and yes, billionaires. It’s not lost on investors however, that even in real estate investing there are several different investment styles. Each style involves varying degrees of risk and reward to the investor. However, different investors have varying risk tolerance capabilities which is why certain types of real estate investing is not for everyone.
For instance, those who prefer to watch the ticker roll across the computer monitor or television screen indicating the worth of their portfolios on a daily basis may not be really cut out for real estate investing. Those who need to see in print the wisdom of their investment practices rather than be content to sit on their investments as they take shape or be willing to actively work in order to make their investments pay off.
To put this into perspective, here are some types of real estate investing and personality fits:
Buy and hold real estate involves purchasing property and holding on to it for a long time while the value of the property appreciates in value. This requires someone who is very savvy when making purchases. More importantly however, it involves someone who has the patience and tenacity to hold on to their investments for the specified period. These investments can provide a smooth retirement for the right investor as well as funds at the proper time for the huge financial obligations like college fees, weddings or capital for business.
Rental properties are another excellent way to make money for those willing to deal with long-term property investments. In this type of investment, rent collections each month are used to pay or contribute to the mortgage or funds while keeping the rest. After the mortgage payments, rents can be earned in perpetuity or the property may be disposed of for a lump sum amount. There are also expenses along the way to be incurred in keeping properties up to date and in demand, however, the benefits are undeniable for the right investor. Again, it calls for patience and long-term thinking.
Flipping is another type of real estate investment which has received a lot of attention in recent times. This process involves purchasing a property below its value, repairing or rehabilitating the property, and then reselling for a substantial profit. Some categories of flipping properties may involve very little alterations. This is one of the few short-term sorts of investment that are highly profitable when it comes to real estate investing. Indeed there are others but those carry even greater risks than flipping.
Of course, there are high-risk real estate ventures for those with a knack for high adrenaline action. One of this is pre-construction real estate investing where the investor pays for the property before construction but at a lower cost. With this form of investment the investor is actually ‘betting’ that the future property will sell at a higher price than the investor paid once the building is complete.
Whether your investment needs are low-risk, high-risk, or something in between, there is quite likely a style of real estate investment that will be suit you.
The Author is a Valuer & Registered Estate Agent and runs an investor education & coaching program at www.investorclinics.com