When it comes to investment portfolios, the best approach is investing to stay wealthy with a more long term approach. When provided with a pool of investment opportunities to choose from, real-estate crowdfunding platforms like Fundrise (review included) recommend real estate investment as the key to growing your net worth in the long term. However, all investors still need to be able to incorporate alternative investments channels that bring favorable solid risk-adjusted returns, for them to get to the level of the ultra-high net worth personalities.
Below are the unconventional ways to grow your net worth with real estate investing:
- Embrace asset-based lending
One unconventional way of growing the network with real estate investing is through asset-based lending. This type of lending is basically a short term loan that is secured through real estate. These loans are likely to offer you yields of up to 9% per year, a rate that is much more than any bank may be able to offer you.
Notably, this kind of investment smoothens your liability portfolio and helps you as an investor to grow your net worth even when the stock market is undergoing turbulent times.
- Engage in real estate crowdfunding
Real estate crowdfunding is a peer to peer type of financing for real estate which provides small investors with the chance to engage in complex and high income commercial real estate projects. Since the average net worth of american households is surprisingly low, real estate crowdfunding can offer a great opportunity for them to invest in real estate. It is also a more diversified investment since you can take a direct position of a project by sharing the ownership of individual property, or otherwise invest in private real estate trusts, where you get to hold investment positions in several properties. The greatest advantage is that you can get double-digit returns, which are paid as regular distributions or capital appreciation. The only downside is that you have to be an accredited investor for you to participate in these.
- Find formidable advisors
To grow your net worth with real estate, get the best advice from experienced professionals who can guide you through the process of sourcing investments that meets your requisite financial objectives. It is important, therefore, to know their experience and verify whether the prospective advisor has ever invested in the deals they have recommended for you. Another critical thing is knowing whether they are receiving any compensation from any third party investment operators that they are vouching for to prevent falling for the common real estate agent lies.
- Know the difference between making money and growing lasting wealth
As an interested real estate investor, for you to be able to improve your net worth is to shun the urge of getting rich quickly, at least not in the traditional sense. Investing in real estate provides the best avenue of building wealth, which is more about making you able to find your freedom rather than the money. Knowing this difference can be the first step towards trudging the journey of growing your net worth with real estate business.
- Take advantage of fixed mortgages
The false precept among many people is that they cannot purchase real estate until they get rich. Considering that a fixed rate loan does not change for the entire life of the loan period, you get value in the long run. For instance, if you were paying $400 per month it will still remain $400 for the 10 year period of the loan. The benefit is that you have the potential of getting higher returns on such fixed mortgage, since in the normal circumstances, inflation would likely increase the value of that rate with time.
- Aways sell last
Another important thing to note in real estate is to always sell last. Imagine selling your real estate property. What this means is that it is over for you and you can never make any more profits. Contrarily, by holding onto a property, you have the opportunity of making more money from it yearly, but even more so as the value of the property appreciates. The only time you should ever decide to sell your property if it has completely refused to work for you. Otherwise, not selling your real estate property is a surefire way of growing your net worth with real estate in the long run.
- Know how to make instant profits
One of the unconventional ways of growing your network with real estate is through `force” appreciation. It involves the process of buying a house or a home and making adjustments on it, which ultimately increases its value. The resulting profit is referred to as force appreciations due to the amount of effort it took to get where it is, with little or no effect in timing market cycle or inflation. However, its key to note that not all improvement will increase the value of your property.
Conclusion
Some of the unconventional ways of growing your net worth in real estate investing include: embracing asset-based lending, engaging in real estate crowdfunding, understanding the power of inflation, only selling your property as a last resort. Moreover, knowing the difference between making money and growing wealthy can be a gamechanger, find formidable advisors and know how to make instant profits
