When most people hear the term “alternative investments,” they probably think of things like commodities (gold, silver, cash crops) or venture capital, but in truth it’s real estate that should be at the top of any list of alternative investments you might be considering.
“Investing in real estate generally offers some appealing benefits, including fairly predictable income, some form of tax benefit and stability,” wrote U.S. News & World Report.
Despite the fact that most financial advisors won’t tell you to invest in brick-and-mortar real estate or land banking, real estate that is paid for in full and is located in a thriving destination remains one of the safest examples of an alternative investment that exists anywhere in the world.
As former U.S. President Franklin D. Roosevelt once said, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
Alternative Investment Strategies That Work
With nearly a decade having passed since one of the worst recessions in history, expanding economies worldwide have seen us through an entire housing cycle and are bolstering the concept of real estate investment. Despite the challenges we’ve faced, real estate has proven to be the one thing many investors could count on when the chips were down.
In fact, real estate investors have more than just survive in the last ten years; they have thrived thanks to a few important real estate investment strategies. Having lived through both ends of the market spectrum over the last decade, investors can take comfort in the fact that, regardless of where the housing cycle is, there will always be a profitable real estate investing strategy.
“Seasoned real estate investors are aware of the importance of maintaining an advantage over the competition,” wrote FortuneBuilders.com. “However, perhaps even more important is the ability to adapt to shifting market trends.”
Types of Real Estate Investment
There are a number of different types of real estate investment, and they all have unique sets of pros and cons, which are somewhat subjective, depending on the circumstances. For example, buying real estate as an alternative investment in a country with poor infrastructure, or in a market that is already totally saturated, would not be a wise decision. On the other hand, buying a smartly managed turnkey vacation rental property in an up-and-coming Caribbean beach destination, or in a domestic market that is showing early signs of revitalization could be exactly what a lagging portfolio needs to improve its overall return on investment (ROI).
Generally speaking, however, investors can choose between buy and hold rental properties, rehabbing properties for resale, wholesaling, REITs and FIBRAs and private money lending. Out of these options, most investors – especially beginners – will benefit most from buy and hold rental properties, but there are still some challenges that must be overcome in order to make this a viable alternative investment idea.
Real Estate Investment for Beginners
Finding an ideal buy and hold rental property can be challenging, even for the most experienced real estate investment companies, especially as the market has become increasingly competitive in recent years, due in part to the rise in popularity of online rental platforms like Airnbnb. Other factors include buying in the right location, and purchasing a property you can actually afford that will provide ongoing ROI through strong rental income.
“Rental asking prices are one of the few factors that have kept pace with home values,” shared FortuneBuilders.com. “Rents are at an all-time high and show no signs of slowing down.”
Instead of opting to go through the unknowns of rehabbing and flipping a property for a smaller profit, buy and hold rental properties provide serious long-term wealth opportunities. Every time the property is rented out, equity increases – or, if you paid cash, that money goes straight into your pocket as ongoing income. Still, the prospect of maintaining a rental property can be daunting – whether it’s a vacation home or a full-time residence. In fact, if the rental property is located in a different state – or even country – than where you reside full time, it can be nerve wracking to contemplate the responsibility that brings, not to mention the routine challenges of successfully renting it out and servicing tenants or guests before, during and after their arrival.
This is just one of many reasons that, for some investors, it makes much more sense to buy a turnkey rental property, preferably in one of the world’s top vacation destinations. By partnering with an experienced property management team that is dedicated to taking care of every detail, investors can rest easy that their vacation home rental is in good hands and will always be in top shape whenever they want to use it.
In addition to having a place to vacation each year in one of your very own favorite locales, turnkey vacation rentals can provide serious ongoing return on investment, not to mention impressive long-term appreciation. Just make sure that any real estate investment companies or property management teams you consider partnering with have an excellent reputation and a proven track record of providing exceptional results.
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