real estate investing is far from easy, many people would say.
Buying a property and hoping to re-sell it quickly at a gain isn’t a workable scenario in the current business climate.
As far as long-term appreciation goes, you can buy a property, looking to purchase one at a price that allows you to pay management fees. Otherwise, you can manage the property yourself. But what about the tenants?
In commercial real estate, you run the risk of not having any tenants, if the local market is glutted. And that is the case in many local markets. In residential real estate, you may find yourself doing a fair amount of maintenance. You may worry about finding the right tenant. How do you create a lease? How do you screen tenants so as to find the ones who will stay a long time and keep up your property for you?
A real-estate investment trust (REIT) is the real hands-free alternative. You simply purchase shares in a publicly traded fund that owns property, often commercial property, and possibly mortgages. When the stock market goes up, these funds tend to go down, and vice versa. This helps balance your holdings.
But the fund fees can siphon off your profits. What if you want a simple, low-risk long-term investment ? One where you can file the deed in your safe deposit box?
You could consider a pre-packaged system where you choose a new or nearly new single-family house from a variety of relative low-cost local markets. With the system comes a pre-selected reliable property manager at negotiated rates. The loan situation is negotiated, too, at five to 10 percent down.
An arrangement like this provides you with a balance sheet with predictable income and expenses. Your tenant will simply pay off the mortgage. In 15 years, you can sell the house and walk off with the equity.
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