Even if you have significant experience as a stock market investor, it can be difficult to know how to begin investing in real estate. Real estate investments are an excellent way to give your portfolio diversity and isolate your investment strategy from the fluctuations that regularly impact the stock market. At the same time, investing in real estate requires a different strategy than buying and selling stocks, and you may feel lost at first.
Investing in property abroad in 2018 is a savvy way to get the best return on investment, and many investors are now looking at Spain with great interest. The property market crash of 2008 led to prices dropping by as much as 50% in some areas, and with price now rising steadily, now is the ideal time to invest, according to Martina Suarez of Javea.properties.There are multiple ways to enter the Spanish real estate market, and you should identify the method that makes you most comfortable to start earning the consistent returns real estate offers.
How to begin
Many people opt to start investing in real estate using REITs, or real estate investment trusts. These are collections of different properties, either commercial or residential, that are managed by an outside entity. By investing in the REIT, you give the trust the capital it needs to expand and maintain its holdings. In response, you receive a portion of the profits generated by the rental payments and the sale of any property.
It’s easy to evaluate a REIT’s historical performance before investing, which allows you to figure out if the fund’s managers have similar financial goals to your own. According to Marbellapads.com, while a REIT will provide you with insulation from stock market variations, it has a lot in common with investing in stocks or mutual funds. As an investor in the REIT, you do not have direct control over what properties a trust invests in and cannot affect how those properties are managed. That lack of control makes investing in a REIT easy, but it may not be the ideal solution for every investor.
Investing on your own
If you want to use a hands-on approach to investing, you can buy properties in Menorca or a similar locale yourself. If you purchase a single- or multi-family structure, you are solely responsible for its management and upkeep, which can be intimidating for a first-time investor especially if you do not live in the country full-time.
While the amount of control involved in direct investing may worry some novice investors, it’s a benefit. Because you can select the specific property you invest in when you purchase real estate, you’re able to accurately target your investment in an area that will provide substantial yields.
You also benefit because you own the asset competently, which provides the potential for high long-term growth. As you build equity in a home, you create lasting value that exists outside the stock market. You’re also able to depreciate the home’s initial cost and purchase the home using a loan. Together, these factors diminish the upfront cost of buying a house without impacting the revenue it generates.