Moguls with multi-billion dollar portfolios may come to mind when you think about people who invest in Orlando real estate. But even a landlord with one or two rental homes “technically” invests in real estate, too.
In fact, there are multiple ways to add property to your investment portfolio. And you don’t need a ton of upfront cash on hand to get started.
Want to Invest in Orlando Realty? Here’s How
Today, we’ll discuss four different ways to invest in real estate that don’t involve landlording responsibilities.
House Flipping
House flipping—the realty model of buying low, making minimal upgrades and selling for higher rates—was a hot trend in the early-to-mid aughts.
With recent economic downturns, some investors also purchase reduced rate homes from financially distressed owners or foreclosed properties. The return on investment with house flipping has slowed with the current seller’s market. But with a little research and knowledge of the best upgrades to get to the best resale values, it is still possible to earn decent returns.
REITs
Real estate investment trusts (REITs) allow investors to buy a share of real estate as part of their stock portfolio. Modeled after mutual funds, REITs allow investors to own a portion of larger real estate initiatives without any active management.
Most REITs are publicly traded properties with larger capital needs, such as
- Medical facilities
- Apartments
- Warehouses
The ability to contribute as little, or as much, cash as wanted makes REITs attractive to beginning or smaller investors. Usually investors can add or withdraw cash from these funds with smaller market penalties.
RELPs
Multiple investors combine resources to form real estate limited partnerships (RELPs) to help pool resources for larger investments. Unlike REITs, each investor has an identified role, including
- Cash
- Expertise
- Manpower
- Ownership of an existing property
With fewer members that have larger percentage ownership of the project, RELPs come with high returns but also high risks. Depending on the type of partnership, some members can be more passive, or active, according to agreements. However, these agreements generally do not allow investors to “cash out” of a project before a set date.
Bridge Loans
These “hard money loans” allow investors to provide private loans to current owners to conduct repairs to current property. The loan serves as an alternative to the owner going to a traditional financial institution.
It takes into account the after repair value (ARV) of a property rather than a borrower’s creditworthiness. This type of investment requires due diligence by the investor—including obtaining title insurance for financial protection. Bridge loans typically provide rates of return on par with bonds. However, they can provide a meaningful way of giving back while still earning passive income.
Looking for Real Estate Opportunities in Orlando?
Naturally each of these different ways to invest in real estate comes with its own set of pros and cons. You should always consult financial and legal experts before moving forward with one.
Interested in learning other ways you can invest in Orlando real estate? Contact our realtor experts or call 321-218-4753 for more information. Even with little cash down, there are tons of real estate opportunities available.
