Are you looking for the best real estate investments in 2023? Well, we’ve got the answer for you! The real estate industry has grown very significantly recently. And we’re looking past simply owning homes now. It’s a very lucrative sector where you can buy, sell, and operate properties for profit.
Real estate can now be defined as its own class of asset. Every major investor or business has its own portfolio of properties that generate income for them. But is this investment option feasible for the common man too? The latest trends certainly say yes! Barriers to entry in this market are dropping, and we’re seeing many different affordable options now. So what are the best real estate investments for 2023? Have a look below!
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What Are Real Estate Investments?
Real estate investments are properties that generate income or are intended for investment purposes. This is a very wide spectrum of investing that includes the sale, purchase, and management of properties for profit. The most common type of investing is owning property and renting it out. Most landlords own multiple properties. They either manage these on their own or hire a property manager.
Another way of real estate investing is owning commercial properties. Landlords can lease properties to retail stores or offices. Or they can turn their properties into warehouses and storage facilities. All of these are very fruitful ways to earn passive income. Owning properties is the easiest method of real estate investing. It requires minimal intervention by owners, and the demand is always high.
Here are some of the best ways to invest in real estate in 2023:
Best Real Estate Investments of 2023
This is owning and leasing properties, as we discussed above. It’s the most common form of investment since it offers a high return. The biggest benefit here is passive income. Landlords don’t have to do much. Their only responsibilities are managing tenants, maintaining the property, and collecting rent. Another significant benefit is that properties appreciate over time. As market conditions change, the demand for specific real estate may increase. Investors who own such properties will see a rise in their asset values.
But there is also a higher risk with this type of investment. What if you don’t get any tenants? If you’re not careful when investing your money in real estate, you may end up with a vacant property. This is why it’s important to find properties that are desirable and in-demand. Investors have to look at a number of factors to find the best property. The most critical one being location. Is the property in an ideal neighborhood? Are there amenities nearby? An easy way to judge a property is to determine if you would want to live there yourself.
This second type of investment is just like rental properties. But instead of renting them out, you sell them. It’s the most popular investing method. The process is simple. All you have to do is buy a property, fix it up, and make it habitable. And then sell it to homebuyers.
Investors need to consider a few factors before getting into house flipping. The first is which house to buy. You need to invest in homes that people would want. A beat-up home that is easy to fix won’t work. Research the local market to find properties. These should be in areas where the demand is rising. After all, you do have to sell it to make a profit.
Then you need to consider how much money you’re putting in. Not only will you buy the house but also make necessary repairs. Buying the house may not cost much if the condition is bad. But the repairs may cost you an arm and a leg. If you don’t have enough money lying around, consult a private lender. Lastly, you need to research the latest trends in home design and features. The more desirable your fixes are, the faster they will sell and the more profit you’ll make.
The latest trend in real estate investments is house hacking. At its core, house hacking involves buying a multi-family property and renting out all but one unit. That one reserved unit is for the investor themselves. House hacking gives them a primary residence in their building while generating passive income on the side.
The rental income from the tenants can be used to pay back the mortgage and build equity. This is a very quick way to pay back real estate loans. Alternatively, the investor can use the rental income to support their next project. House hacking is a win-win situation for investors. Not only do they enjoy a passive income, but their property also appreciates with time. This makes it easy to build wealth with real estate investments.
House hacking has become very popular in the last decade. This is because of the advent of vacation rental services like Airbnb. House hackers simply list their units up on these rental apps and attract a lot of tourists and travelers. Short-term vacation rentals are much more profitable. The more appealing the location of the property, the more tourists you’ll get.
Real Estate Investment Trusts
On to the more technical investment options in the real estate sector. A real estate investment trust owns residential and commercial properties for profit. These properties include apartment buildings, warehouses, retail stores, and office buildings.
As an investor, you would put your money into these trusts. And they’ll use it to buy and operate multiple properties. This is just like owning stock in any other company. In return, you’ll receive dividends. REITs offer a much higher dividend than other companies. Another benefit is capital appreciation. As the market shifts, property values rise, as does the asset value of these REITs. So, if you choose the right REITs, you’ll be set with a high passive income that will increase over time. REITs are tax-efficient as well, which makes them an ideal option for new investors. If you want to get into the real estate investment game but don’t want to dive too deep, REITs are ideal for you.
Online crowdfunding platforms are another recent trend in real estate. These are marketplaces where investors can pool money for real estate-related transactions. Real estate projects are funded through small investments by a large number of investors. Often, these are REITs. But some platforms also give access to private real estate projects.
This is a very hands-off approach to real estate investing. All you have to do is sign up for the platform, find projects that fit your portfolio, and invest as much as you like. Crowdfunding has removed one of the most significant barriers to real estate investing, i.e., the need for high capital. Some platforms allow people to start investing with as little as $100. Some of the best real estate crowdfunding platforms are Fundrise, Crowdbase, Cityfunds, and HoneyBricks.
Start Investing in Real Estate Today!
Investment options in the real estate sector are expanding every year. There are many different ways you can utilize your money for a diversified portfolio. But it all depends on your preferences. If you don’t want to invest a lot of money, go for crowdfunding. If you want a more hands-on experience, house hacking is your best friend. However, if you want to take one project at a time, flip houses. There’s something for everyone in real estate investing.
Featured Image: Bria Homes