Broadening your investment portfolio to include real estate provides both diversification and added risk. Aside from real estate investment trusts managed by Fidelity, Vanguard and many others, there are several ways to invest more directly in real estate, such as purchasing land in a growing area, buying a fixer-upper or acquiring rental properties in well-established neighborhoods.

When you consider investing in properties, keep in mind how much time and money you want to invest. Here are some things to think about as your consider your options.

Raw Land
This can be a good option if you find land at a good price in an area with great growth potential. Examples are suburban areas of a big city. The advantage of owning land is that there will be low maintenance, but you may need to hold on to this investment for 5 or more years to get the benefits. Be prepared to research local zoning regulations, building codes and other details to be sure you’re purchasing in the right area.

Rental Properties
The most common investment in residential real estate is purchase of a condo or single-family home to rent out. If you are new to real estate investment, this can be a good option. The rental income will offset the ownership costs like mortgage and taxes.

Multifamily properties allow you to rent to several tenants simultaneously but be sure you can handle the work and costs. Be sure to include contingencies such as loss of income when units are vacant. If you don’t have time to deal with tenants’ issues, a professional management company can provide a buffer between you and your tenants at a typical cost of 5 to 10% of your rental income.

Fix-and-Flip
Do you have the desire and vision to improve on a property? Do you know a good contractor to bring your vision to reality? If so, fixer-uppers could be another option. These properties need work at significant cost beyond purchase price, but with the help of your knowledgeable licensed contractor, you can update them, make repairs, and resell for a profit

No matter what kind of investment real estate property you choose, it’s crucial to have a knowledgeable team on your side. If the challenges and potential investment return appeal to you, get in touch so we can work together to find the right investment property for your goals.