How to Invest in Real Estate: 5 Simple Ways to Get Started
Investing in real estate can help you build home equity and also generate passive income. Both happen through the process of appreciation and more direct methods we’ll get in to.
Unlike what you may have heard, owning your own home is not the only way to get into real estate.
Different investment methods have the potential to earn significant returns and add diversification to your portfolio. That’s a lot of wording to basically say real estate offers a range of ways to make money. Some are low maintenance while others require more attention. There are passive investments, those that are high-risk, and short-term ones.
Needless to say, there is something for everyone.
What exactly is real estate?
When you hear the word “real estate”, many other words come to mind: residential vs. commercial, fix-and-flip, property management, etc. These are all components of real estate, but they are not a complete definition.
The Uniform Standards of Professional Appraisal Practice (USPAP), the industry guidebook for real estate appraisers, defines real estate as:
An identified parcel or tract of land, including improvements, if any.
The use of the word “improvements” is vital to understanding real estate. It alludes to the fact that real estate includes anything fixed or permanently attached to the land. This can refer to fences, roads, trees, etc.
In the context of real estate, “improvements” can include a home, store, office building, or another type of structure built on the land.
Additionally, real estate can include rights attached to a piece of property — such as air rights, water rights, and mineral rights to any natural resources beneath the ground. Most do not realize how broad the category actually is.