If you’ve ever dreamt of owning a property later on in life, you are actually closer than you think. With all the technological advancements happening globally, accessing various types of investments has never been easier. In particular, real estate investing turned out to be a target option for many lately. Why so? Real estate investments has proved to be one of the most lucrative investments of all time and one of the most accessible in 2021. Investing in real estate also helps diversify your portfolio and undoubtedly serves as a great source of income. For this reason, we’ve witnessed a spike in property investments in 2021, especially within the UAE. The rising interest in Dubai’s properties have been accurately reflected within our inaugural H1 report.
Click here to download H1 2021 Dubai Real Estate Market Report
Although real estate investing has been a popular option lately, many don’t know how or from where to start. In fact, many aren’t even aware how easily accessible real estate is nowadays. Yet, it is crucial that interested investors perform their due diligence and consult the right advisors prior to making any decision.
Here are some of the best options for individual investors:
Real Estate Investment Platforms (REIPs)
You can think of digital property investment platforms as a marketplace between interested investors and real estate developers. Typically, REIPs enable people to directly invest in attractive investment properties at a fraction of total prices using a crowdfunding model. It’s when you and a group of like-minded people co-invest in a property or even a range of properties to earn healthy returns. You basically pool funds together in order to finance the property instead of holding the burden of covering full cost on your own. However, the only downside would be not being able to liquidate your investments whenever you want. For this reason, you need to think of it as a long-term process.
It’s worth noting that real estate crowdfunding has been an accelerating trend in the MENA region lately. Why is that? Well, when minimum investments required can be as low as 130$, more and more people will be attracted to the idea. smartcrowd.ae, the first and largest regulated property investment platform in the MENA region, is now dropping any barriers to entry. Their mission is to make real estate investing accessible to anyone and everyone. In fact, SmartCrowd is the only digital platform to be offering an extremely low barrier to entry, as low as 500 Dhs. So you’ve got low cost, hassle-free, regulated, and a fully digital experience… i mean how easier can property investing be?!
Real Estate Investment Trusts (REITs)
REITs differ from REIPs in the fact that your investment tends to be highly liquid. REIT is like a trust formed for the purpose of using investors money purchase income-generating properties. Like mutual funds and exchange-traded funds, REITs are companies that own, operate, or finance a variety of properties and real estate ventures. Investors buy shares of a REIT and earn a proportionate share of its profits. So, if you’re looking to keep your investments liquid, REITs is your top option.
Real Estate Limited Partnerships (RELPs)
RELPs offer investors a diversified portfolio of real estate investment options, allowing you to pool your funds with others’ to purchase, lease, develop, and sell properties you couldn’t manage or afford on your own.
Similar to REITs, RELPs often own a pool of properties, but their organization and structure is different. Primarily: RELPs are a type of private equity – they are not listed on public exchanges. Moreover, RELPs exist for a limited number of years, which typically ranges between 7 and 12 years only. During this period, RELPs operates like a small company, forming business plans and identifying properties to buy, develop, manage, and ultimately sell, with profits allocated as they go. After all investments have been made, the partnership dissolves. Generally, RELPs are more suitable for high net-worth individuals, since most of them require a minimum investment of $2000 or more, depending on the size of the property.
Becoming a Landlord
The classical way! You can invest in real estate by buying a property and leasing it all out, or a portion of it. However, If your tenant doesn’t pay enough rent to cover the mortgage, insurance, taxes, and maintenance, you are effectively losing money. Ideally, your mortgage payment will be relatively fixed while rent prices rise, increasing your net income over time. For this reason, choosing a top and targeted location is essential for achieving desired returns. Another option could also be short-term rental via Airbnb for example. If you live in a touristic area, your house can simply be a holiday home and benefit from that advantage.
The Bottom Line
Although real estate seems to be a lucrative investment with a potential of building steady wealth over time, it is crucial one does proper research about all factors related to that property. Each alternative may seem the most favorable option, depending on your target and interests. Hence, before committing to any decision make sure that the choice you’ve made is aligned with your capabilities and long-term goals.