When you picture a real estate investor, you might imagine a long-term rental property landlord or maybe a vacation rental property owner. You could also picture someone keeping an eye on their real estate investment trusts (REITs) online or a person who owns and leases out a commercial building. But there are all kinds of ways to be a real estate investor, and you could be one without even realizing it.
Let’s look at a couple of ways you could have invested in real estate without thinking of it as a real estate investment. Then we’ll explore how you might want to take advantage of your newfound real estate investor status if either of these applies to you.
Your business space
If you’re a business owner who owns the commercial space where you do business, be it a small office, shop, or restaurant, you’re a real estate investor even if you’ve never thought of yourself that way. You’ve made a financial investment in a piece of real estate. And while you’re using it as a location for making money with your business, you may be able to leverage your investment to make money off of the real estate itself at the same time.
Do you have any space to spare? If not, would it be possible to rearrange things a bit so you do? Leasing out part of your commercial space to another business could benefit you in a variety of ways. Of course, you’d have rent coming in every month. But if you choose a complementary tenant, you could each serve as a foot traffic draw for one another’s businesses. It’s a good idea to consult a real estate attorney for help drawing up a contract if you go this route.
And what if you lease but don’t own your business space and have room to spare? You may be able to sublet. Check your contract to see if it’s forbidden. If it’s not, talk to your landlord.
The most obvious way to be an “accidental” real estate investor is by being a homeowner. Most homeowners are just seeking a nice place for their families to live and not thinking of the purchase as an investment. But a home is an investment. And there will always be market factors beyond your control that will impact how well it performs as an investment over time.
But there are many factors well within your control that can dramatically impact your home’s value, too. Home maintenance is crucial here. In the short term, letting home maintenance issues go for too long can turn small costs into big ones as problems grow. Long term, extreme neglect of home maintenance issues can lead to a home eventually becoming so costly to repair that it loses all value.
And if you’re treating your home as an investment, you can make sure that all renovations you decide to make will give you a great return.
You can also take advantage of this investment by borrowing against your home’s equity. You can usually save quite a bit in interest with a home equity loan, and you’re not limited in how you can use the money.
Or you could even decide to rent out a room in your home. It can work better if you have a guest house or in-law apartment of some sort so everyone can have their own space. And if you move, you may want to consider renting out your current home instead of selling.
Are you an undercover real estate investor?
If you own a commercial property or your home, you’re a real estate investor. Taking full advantage of that fact may just be a matter of thinking like an investor rather than someone who is simply paying for use of a space.
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