For most people, the term real estate has a limited number of meanings. They tend to hear the words and think of either a private home or a piece of commercial property. But there’s much more to the concept than those two classic examples.
The computer age has given rise to an entirely new paradigm of real estate that includes an intangible asset known as digital properties. Other popular ways to invest in the broad real estate segment include income-producing rental homes, REITs (real estate investment trusts), fixer-uppers, and office condos.
The modern face of the market is both exciting and potentially lucrative for investors who prefer to park their capital in assets other than old-fashioned stocks and bonds. Here are the relevant details about the top five ways people will invest in real estate in the 2020s.
Virtual property within the metaverse, the internet-based VR (virtual reality) world, is one of the newest assets. Those who scoff at digital real estate should regularly consider that many millions of dollars trade hands between sellers and buyers. In the real world, one principal Miami-based real estate broker offers all customers digital replicas of any tangible asset they purchase. For prospective investors, the profits are uncertain but potentially huge.
Consider that just a few years ago, digital properties sold for tiny sums but now go for several thousand dollars each. Several reputable real estate brokers and companies are exploring the digital real estate segment, and the concept is gaining wide social acceptance among serious investors. Anyone who owns real estate should look closer at adding one or more digital assets to their portfolios.
Vacation rental homes
Rental homes offer two benefits for the price of one. First, owners can purchase one in a distant city of their choosing, not to mention earn regular income. When they want to go on vacation, they can take the home off the rental market and stay in it for as long as they wish without paying for pricey hotels or someone else’s rental property. Other owners use holiday city rental houses as steady, long-term income streams to earn top dollar for peak seasons but then move into the homes after retiring.
REITs (Real Estate Investment Trusts)
Affordable shares of real estate assets are what REITs are all about. Not long ago, anyone who wanted to earn income from property ownership had to invest significant capital, deal with complicated legal documents, and take on outsized risks. With REITs, anyone can purchase tiny amounts of carefully vetted properties and avoid all the headaches of actual ownership, like landlord duties and hefty initial investments.
For at least 30 years, there’s been an active flipping market in the sector. It’s comprised of buyers who seek fixer-upper houses, renovate them, and quickly place them back on the open market for sale. Flippers operate on the principle of combining sweat equity with short-term speculation to earn a potentially positive return on every worthy fixer-upper they acquire. Initial expenses include the property itself, along with renovation work. Pursuing a side job as a house flipper can offer a steady, significant income for those with the money, time, and energy.
Investing in office condos is a relatively easy way to get into the market as a financial backer. Some condos, most of which are located in strip malls and small commercial buildings, cost less than residential homes and require much less renovation. People who like working on the fringes of commercial real estate can begin by acquiring a single office condo, fixing it up, furnishing it, and then selling it to a willing buyer.