Diversifying your investment portfolio is essential. By spreading your money across different investments, you can minimize your risk and maximize your potential for ROI, says Pedram Zohrevand. A well-rounded portfolio will include stocks, bonds, and cash equivalents—but it shouldn’t stop there. Adding real estate to the mix can provide additional stability and potential for growth. Here are five real estate investments to consider adding to your portfolio.
Rental Properties
A rental property can be a great way to generate income, but it also comes with a lot of responsibility. As a landlord, you’ll be responsible for maintaining the property and dealing with any repair or maintenance issues. You’ll also need to screen tenants carefully to ensure they can pay rent on time and take good care of the property.
If you’re not prepared to deal with the day-to-day challenges of being a landlord, then a rental property might not be a suitable investment. However, if you’re up for the challenge, a rental property can provide a steady stream of income and the potential for long-term growth.
Commercial Properties
Commercial properties are buildings or land that are used for commercial purposes. This includes office buildings, retail stores, warehouses, and factories. Commercial properties are often larger than residential ones and are located in areas zoned for commercial use. They may also have special features like loading docks and fire sprinklers.
Commercial properties typically generate income from rent or lease payments. They may also be sold or leased for other purposes, such as storage or manufacturing. Commercial properties can be a good investment for businesses or individuals looking to generate income from rental payments.
Mortgages
A mortgage is a loan used to purchase a piece of property. The property is collateral for the loan, and the borrower makes payments over time. Mortgages typically have a term of 15 or 30 years, and the interest rate on a loan may be fixed or variable. Mortgage loans are available from banks, credit unions, and other financial institutions.
To qualify for a mortgage, borrowers must typically have good credit and a steady income. They will also need to make a down payment on the property, normally 20% of the purchase price. Mortgage loans can be used to purchase primary residences, investment properties, and vacation homes.
Tax Liens
A tax lien is a legal claim the government makes on a taxpayer’s property to secure payment of taxes. The lien gives the government the right to seize and sell the property to recover the unpaid taxes. Tax liens can be placed on real and personal property, and federal, and state governments can impose them. Tax liens are often set when taxpayers fail to pay their taxes.
However, they can also be imposed due to errors or non-payment of other debts owed to the government. Pedram Zohrevand agrees that a tax lien can devastate a taxpayer’s finances, and it can often lead to the seizure of property and even jail time. As a result, taxpayers must understand their rights and responsibilities for tax liens.
Precious Metals
Precious metals are rare, durable, and have a high economic value. The most well-known precious metals are gold and silver, but platinum, palladium, rhodium, and ruthenium are also used. Precious metals are often used in jewelry and coins, but they also have a variety of industrial applications.
For example, gold is used in electronic circuitry, silver is used in photography, and platinum is used in catalytic converters. Precious metals are also a popular investment choice because they tend to hold their value well during economic turmoil. As a result, precious metals can be a valuable addition to any portfolio.
Final Thoughts
If you want to invest in real estate but don’t want to limit yourself to a single market, consider one of these five options. Each of these investments offers the potential for high returns while providing diversity to your portfolio.
