Low Risk Real Estate Investment

Given the uncertainties in our life today, investments have become very important, especially if we want to live a comfortable life after retirement. Investments carry a lot of risks as well as liquidity problems, which should be ideally considered before investing your hard earned money. Moreover, given that investments are driven by forces in the market, risks endured can be quite high, unless you go for low-risk investments. Low-risk investments include investing in bonds, certificate deposits, annuities, money mutual funds and of course, real estate. However, low-risk real estate investment is not your typical investment in property but requires a lot of study and understanding, in order to cut down on the risk factor significantly.

One of the popular low-risk real estate investment options is investing in land. While the amount of investment is definitely higher than in any other type of investment, the risk involved can be called low. This is huge because, despite the market fluctuations in the price of land in any given area, you will never make a loss. Of course, you might have to wait for a longer period in case you want to sell the land, which might create liquidity problems. On the other hand, if you are planning to develop the landed property by building a structure on it, then you will definitely profit more than if you were to sell the land as it is, making it a high yielding investment with the absolutely low risk involved.

If you are not worried about immediate returns from the property or aiming for high profits right away from your property, then another low-risk real estate investment option is rental property. Under this type of investment, you purchase property with a view to renting it to tenants. The cost of such properties does not usually reduce but actually increases over time. Additionally, if you have a property in an area conducive to tenants in terms of amenities available, then you definitely have a golden goose, which will give you golden eggs at regular intervals. However, the only problem with this kind of property might be the slow start in profits, given that you might be paying off your mortgage on the property as well as ensuring that the property is in top condition.

Wholesaling of the property is another low-risk real estate investment option available to investors, especially those who are entering the market for the first time. Wholesaling of property includes from the owner and selling it as it is to another person wanting such properties. This might seem akin to flipping but the major difference between the two is that flipping might involve changing the property in some way before selling but in wholesaling, you do not make any changes whatsoever. Moreover, it is important to note that in wholesaling, you are buying directly from the owner, which means that the cost of purchase will be lower than if you were to purchase from a realtor, thus making the entire deal really profitable. Lastly, under this type of investment, you sell it to people who are interested in refurbishing or renovating properties. Therefore, the risks involved are much lower than in flipping.

Be sure to check out our real estate buying tips for more information!