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    Long-Term vs Short-Term Real Estate Investment – Find The Right Strategy For Your Needs

    • 5 min read
    • Last Modified Date: March 14, 2024
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    • Diversification of investment portfolios is crucial to mitigate the risk of losing everything in a single asset or market. Allocating assets across stocks, bonds, ETFs, and real estate enhances the potential for higher returns while minimizing losses.
    • Real estate investments offer diverse opportunities, from long-term ventures to short-term options, further enriching investment choices.
    • Real Estate is a unique asset class that offers investment opportunities for every kind of investor. There are varied types of real estate investments. You can invest in several ways, for whatever tenure you want in Real Estate.
    • The best part is that with every investment you make in Real Estate, the investment is backed by a physical asset. That’s the reason Real Estate makes it to the portfolio of most investors. Real Estate investment is the best way to acquire wealth. Along with capital appreciation, it is also great for generating passive income.
    • One big dilemma of real estate investments for beginners is the many types of real estate investments available. They are not sure whether to choose a long-term investment option or a short-term real estate investment. Both options have their benefits and risks.
    • So, understanding and knowing the pros and cons of both investment options is important to become a successful investor There are numerous methods for investing in real estate.
    • Some investors choose to follow traditional methods of buying land or residential properties for capital appreciation and rental income. But there are numerous other ways you can invest in Real Estate.

    Short-term real estate investments

    Real estate is a short-term investment. But what is short term property investment? Any investment that lasts for 1 year or less, is a short-term property investment.

    A short term property investment usually provides investors with a higher rate of returns but with a higher risk. With short-term property investments, there is an equal chance of making money and losing money. Though the risk is higher if you are willing to invest in short-term projects you can make a lot of profits.

    For properties in areas with a stable increase in value, investing in the short term would be great.

    There are also a few other short term property investment strategies to try your hand at.

    • Rental Properties

    Short-term residential properties have become a popular way to invest in real estate. Investors can even make more money from short-term rentals than from traditional long-term rentals. Vacation properties are popular short-term rental properties. With the increasing number of tourists and tourist places, vacation properties are always in demand. A properly-maintained house in a good tourist area is all you need to earn handsome rental income via short-term property investment.

    • Fix and flip

    Fix-and-flip properties also attract short-term real estate investors. They purchase and renovate a property and flip it for a profit. This type of funding for flipping houses offers investors close investment within a short tenure and yields a high income. Hard money loans are the most popular type of fix-and-flip loan.

    • P2P

    These are short-term investment options where the investors lend their money for rehab projects. Platforms for P2P loans are great for investors to have borrowers use their money as they get more interest than any other traditional investment option. The investor gets the returns each month as borrowers make the repayments.

    • Real estate wholesaling

    Real estate wholesaling is a short-term investment strategy where you secure distressed properties at discounted prices and assign the contract to another investor for a fee, without ever owning the property. The goal is to earn profits without the need for significant capital investment. By identifying and contracting properties at favorable terms, promoting them to potential buyers, and charging a wholesale fee, you can generate substantial profits with minimal risk. This strategy is particularly suitable for investors with limited funds as it allows them to participate in real estate without using their capital.

    • Real Estate Structured Debt

    Real estate structured debt products are also known as fixed-income products. These are specialized financial instruments created by private enterprises or businesses. These instruments come with guaranteed exit options and are typically held as short-term investments. The fixed-income nature of these products ensures that they provide a predetermined amount of return to investors regularly. For instance, Assetmonk offers real estate structured debt products like the Apex Series A Structured Debt, which allows fractional investments starting from just Rs. 10 lakhs. The investment tenure for this product is 36 months, and it offers an assured exit with an assured internal rate of return (IRR) of 17 percent.

    Also, read The Benefits of Investing in Alternative Assets for Indian Investors

    Long-term real estate investments

    Investments that last for more than 12 months are long-term investments. Real Estate gets considered long-term real estate investing will get considered best if you wish to avoid higher risks. Long-term real estate investing gives a lower, stable return with good appreciation however the risk involved is comparatively less. Real estate long-term is also the potential passive income-producing through rentals.

    In long-term real estate investing, money is tied up for the long term, and the small amount of returns you make over time becomes solid towards the end of the tenure. Long-term investments are also benefited by tax benefits where the returns are taxed lesser than the short-term gains. These real estate long-term investments to choose from are:

    • Equity crowdfunding

    The equity crowdfunding platform is a modern real estate investment vehicle that is highly popular for long-term investments. These platforms enable investors to fund any type of commercial or residential property that generates handsome rentals with value appreciation. Equity crowdfunding is a reliable source for long-term investments and the investor can fund investments in the comfort of their house.

    • Multifamily housing

    Multi-housing properties are a great source of long-term investment. Investing in these types of properties helps in earning a stable passive income along with a good capital appreciation. Multifamily housing investment is a strategy used by investors who want to avoid risk and generate passive income.

    • REITs

    A REIT is a company that owns or funds real estate properties producing income. REITs collect the investment from investors and buy their profitable real estate properties the profits generated from these properties are returned to the investors. In this way, the investors indirectly own and earn income from a real estate property but do not have to worry about the property’s maintenance.

    • Co-Living

    Co-living investment involves investing in properties specifically designed and operated for communal living arrangements. It aims to provide affordable and flexible housing options. Investors can participate in this type of investment by purchasing entire properties or acquiring shares in co-living real estate investment trusts (REITs) or other investment vehicles. Assetmonk has recently introduced “The Landing“.

    It is a pioneering Co-Living Ecosystem located at GMR Hyderabad Airport, one of India’s busiest airports. This long-term real estate investment opportunity has a tenure of 45 years. It offers fixed returns of 8% per annum, paid monthly, with the full principal amount being repaid within 12 years. Additionally, investors receive a 31% revenue share after the principal repayment until the end of the lease.

    Bottom Line

    No matter how you choose to invest in Real Estate you will never regret investing in it. Investing in Real Estate property is one of the best decisions you’ll ever make.

    Choosing the investment option based on the investment objective is also important for becoming a successful investor. Real estate is also a great way to diversify the portfolio, you can invest in both options to reduce the risk involved. Now, real estate investment for beginners does not have to get intimidating anymore with this guide.

    Assetmonk is a unique alternative investment platform offering high-potential long-term and short term real estate investment opportunities to value investors. Based on your investment objectives, we offer real estate investment opportunities customized to your needs. Short-term real estate investments include commercial real estate structured debts yielding you a 17 percent IRR. Long-term real estate investments include The Landing. Click on the link above to learn more.

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