Real estate investments can be categorized into two main groups according to the answer to this question: do you own the house you're profiting from? Yes or no- here are some characteristics of each situation.
As a homeowner
If you do own a house, you can become an investor in real estate in two ways. The first one is through rent, which lets you generate physical income that you receive every month with rent payments. In this case, it becomes evident that you're investing by owning a house, as you're making money out of it in hopes of earning more than its initial cost.
On the other hand, you can also invest in real estate simply by owning a house and living in it. Unlike the value of cars, the one of houses tends to rise in time. This is due to the house's appreciation. In other words, your home's value tends to grow over time. If you chose to sell your house, it's highly possible that you'll make some profit.
You can find many advantages in investing in real estate with a house or apartment that you actually own. Firstly, it's the traditional way to do it. Returns are usually higher if you play your cards right. Additionally, owning a house literally puts a roof over your head, which is something other investments can't do.
As for the disadvantages of this kind of investment, there are also a few to consider. It's not for a lot of people; you need the money, patience, and skill to pull it off. If you mess up, losses can be pretty hard. Essentially, it's a highly risky investment with potentially high returns.
As a member of a real estate investment platform
With the power of technology, new doors have been opened and there are more ways to invest in real estate. One of them is without owning a house or apartment, something that was unthinkable of just a few years ago. How could you make money with real estate without directly participating in it?
Well, you can take an indirect part in it. There are many companies, like Fundrise, that allow accredited and non-accredited investors to benefit from real estate investments. They usually do this through crowdfunding, where many investors pitch in with some money, which the company manages professionally and uses to invest in real estate. Some companies own the buildings they invest in, and others don't.
This option is accessible to many people, as it isn't too expensive. The nature of real estate makes it easy to gain steady returns, so there's a lower risk. You should research different real estate investment platforms before deciding to put your money in one; check each of their terms and conditions and find the one that suits you the best!