Investing in real estate property has become a trending way to earn a profit for the last 50 years. It is important to learn the different property purchasing options and learn how one can really earn from real estate property investing.
A real estate purchase option is a type of contract that gives a person exclusive rights to buy a certain piece of real estate. The seller can’t sell the real estate property to any other buyer, but the buyer with the option has no obligation to buy the property. It is a type of reservation that lasts for 6 months to one year. This is best if you do not have enough funds yet to buy a real estate property you badly want. This way, you can secure a high-investment property at a low risk.
Lease Option
This is the agreement between the tenant of a rental real estate property and the renter where the renter can buy the rented property after the predetermined rental period. This type of option has many aspects, which is why it is best to have a knowledgeable lawyer to assist you with this deal.
Real Estate Investment Trust
When a corporation or a trust purchases real estate property using investors’ money, a real estate investment trust (REIT) is made. This is sold and bought on major exchanges like ordinary stocks. Taxation is more advantageous with REITs compared to buying real estate properties as a regular company.
Real Estate Limited Liability Companies
More investors prefer to use Limited Liability Companies (LLCs) because it has more benefits that can protect personal assets. Its main advantage is that the liability of the members is limited to the financial investment they placed on the table. This means if the worst happens, the investors will only lose the assets held by the LLC at most. All the members or the owners of the LLC are shielded from each other’s individual liabilities, specifically debts and other obligations.
