When looking for investment options, there are a lot of choices on where to put your money, including in rental property investments. Stocks, for instance, bonds, exchange-traded funds, and short-term rentals are good investments, your level of experience notwithstanding. Forex and cryptocurrency may be too volatile if you are a beginner.The investment option you choose depends on how involved you are willing to be in your investments. It also depends on how much money you have to start investing and how much risk you’re comfortable taking on.Passive real estate income, for instance, is a good investment strategy. One that can be satisfying and lucrative. Unlike a stock or bond investor, a prospective investor in rental property investments can use leverage to purchase a property. They can do this by paying a portion of the total cost upfront, then paying off the balance and interest over time.You may have decided to invest in a passive income rental property but don’t have the time to attend to the property. That’s where property management companies come in.Thus, if you’ve been looking for a property management company to help you with the management, we recommend techvestor.com. Professional services from qualified experts in property management companies help to ensure the proper running of the daily operations of your property. They ensure that your clients are treated well enough to give you a good review when they leave.
How to Find Great Short-Term Investments
The market is currently at an all-time high. At some point in the future, it might inevitably pull back. But while investing long-term, you might also have short-term goals that need short-term investments.If you’re a new investor and don’t want to see a decline in your portfolio, this is the right time to consider short-term investment options. Here are some of the options you can work with.
BRRRR Investing
BRRRR is an acronym for Buy, Remodel, Rent, Refinance, and Repeat. It’s an excellent way of building a portfolio for your rental property investments. You can use this strategy without running out of cash early in your investment journey.You basically find fixer-upper properties that you can purchase below their full value. You then use short-term cash or financing to purchase the property. After it’s fixed and stabilized, you refinance with a long-term mortgage. When done properly, an investor can pull most or all of their original capital back out for the next deal.This strategy is best used early on to build your portfolio. That’s because it’s smart to transition to lower leverage and lower risk approaches.
Discounted Note Investing
This involves creating or buying notes at a discount to the note’s full value. Due to this margin of safety, you can create large returns and reduce your risk.One of the ways to invest in discounted notes is by buying notes from banks. It’s a much more advanced strategy, so it would be best to study it first before jumping in.While this strategy is profitable, federal and state regulations like the Dodd-Frank Act have made it hard for small investors to navigate. While there are a few exceptions, beginners in short term rental investments must follow many of the same costly rules as large lenders. Thus, it’s important that you get help from your local attorney before utilizing the strategy.
Online Real Estate Platforms
Real estate investment platforms are for investors who’d like to join others in investing in residential deals or bigger commercial deals. The investments are made through online real estate platforms, also known as real estate crowdfunding.This strategy requires you to have invested capital. However, you only need less compared to what’s required to buy properties outright.These online rental properties connect investors looking to finance projects with developers in the real estate sector. In some cases, you’ll not need a lot of money to diversify your investments.With this as a short-term rental strategy, you can invest in single projects or a portfolio of projects.
CD Ladders and Money Market Accounts
Placing money in a certificate of deposit (CD) will earn you slightly more compared to a savings account. You may, however, note that the best rates are only available if you agree to tie up your money for at least a year.To keep cash liquid, some investors set up CD ladders with different maturity dates. This helps to ensure that at least parts of your savings are available at any given time.Money markets are another short-term investment strategy. They are similar to online savings accounts, with one exception. That is,that money market accounts aren’t FDIC insured. So you can actually earn a little higher interest rate on the account versus a typical savings account.Usually, money market accounts have account minimums that must also be considered. That’s especially if you want to earn the best rate.
Short-term Bond funds
The other area that you may want to consider is investing in short-term bonds. These bonds have maturities of less than a year, making them less susceptible to interest rate hikes and stock market events. That’s not to say that they don’t lose value. They basically move less in price than longer maturity bonds.Some of the key categories for bonds include:
Municipal bonds
Corporate bonds
U.S government bonds
With government bonds, your payment is backed by the US government. That’s to mean that your risk is minimal. For corporate and municipal bonds, the bonds are backed by local cities and companiesYou must, however, note that investing in a bond fund is different from investing in a single bond. If you invest in a bond fund, your principal will either go up or down significantly.If you prefer not to invest in bonds, you have to do this through a brokerage. One of the best brokerages for buying individual bonds and bond funds is TD Ameritrade. It has a bond screener built into its platform. This makes it easy to search for individual bonds to buy and give you a breakdown of all the aspects of the bond.
Peer-to-peer lending
This is when you take a loan from another person without involving a middlemanPeer-to-peer lending is also known as social lending. It’s a relatively new type of investment opportunity in formal capacity. There are also websites that facilitate peer-to-peer lending.You’ll be required to open an account with a P2P lending website and deposit a sum of money. That money is what will be used for your loan.As a loan applicant, you’ll need to create a portfolio that will be matched up with you. A lot of the peer-to-peer lending sites are fairly good at assigning some kind of “risk rating” to an applicant. This will help you to determine which loans are best for you to grant.A peer-to-peer account may be a good alternative to a savings account. That’s because it generates more interest. There is, of course, a risk of default. So you must carefully choose your applicant and re-evaluate your risk tolerance before you grant a loan.
Conclusion
Short-term investing is where you make investments that will generate returns in a period of 1 to 5 years. You must, however, note that the phrase “short-term investment” is highly relative.The best short-term investments are beneficial. That’s considering that they can supply you with a steady or more immediate cash-flow. It’s also a great way of diversifying investment portfolios. Before you make short-term investments, however, you must identify your investment goals and risk tolerance.
