Purchasing Long Island real estate is more than just buying a place to live. Investing in a property has become very popular in the last five decades and is now a common investment for those who want to earn a steady stream of cash. Even though the real estate market has numerous opportunities for making huge profits, acquiring real estate could be more complicated compared to investing in intangible assets like bonds and stocks. The goal of this article is to introduce you to buying real estate as an investment.
This type of investment is basically rental property. This is an investment as old as the practice of land ownership. You can easily purchase a property and rent it out for tenants. Your responsibility is to pay the real estate tax, mortgage, and maintenance expenses. You can also charge these expenses on top of the rental fee to gain a monthly income, though most property owners in Long Island are patient and charge minimal rent for expenses until the mortgage has been paid in full and a large percentage of the rent will become income.
2.Real Estate Trading
Real estate trading is a more dynamic form of investment in this industry. Similar to stock traders that are not physically in touch with stock investors, real estate traders are also several leagues away from real estate investors. Traders in real estate purchase properties and hold them for a certain period, usually not more than a year, with the ultimate goal of making a profit. This is also known as flipping real estate and is based on purchasing properties that are currently in demand in the market or considerably undervalued.
3.Long Island Real Estate Investment Group
A real estate investment group functions like a mutual fund for rentals but without the hassles of land ownership. A company usually develops or purchases a condo building or an apartment block then finds investors to purchase them through the investment group.
4.Real Estate Investment Trust (REIT)
REIT is established when a trust or a company uses funds from investors to buy and operate income properties. These trusts are purchased and sold on the primary exchanges similar to any other kind of stock. Usually, a company is required to pay 90% of its profits in dividends to maintain its REIT status.
5.Real Estate Leverage
Aside from REITs, acquiring real estate will allow investors to leverage opportunities. If you want to purchase a stock, you need to pay the full value of the stock at the same time you purchase the property. Even if you are purchasing on margin, the amount that you can borrow is still less than the value of the property.
Similar to any kind of investment, there is tremendous potential in Long Island real estate. However, this doesn’t mean that it will be a guaranteed profit. Hence, exercise caution in choosing your options and consider the advantages of disadvantages of each viable investment type.