Investing in real estate can be an effective way to hedge against volatility in the stock market. This is because the real estate market has a low correlation with stock and other equity markets. In some cases, you may be able to obtain greater short and long-term returns on your capital by buying a house or a parcel of land instead of shares of your favorite company. Let’s take a closer look at five real estate investment opportunities that may help you meet your financial goals.

Real Estate Investment Trusts Are Ideal for Indirect Investors

A real estate investment trust (REIT) is similar to a mutual fund in that it pools money from multiple investors to finance various projects. For instance, a REIT may dedicate itself to buying commercial properties or to buying mortgages attached to residential properties. Putting your money in a REIT means that you can own property without having to maintain or oversee it. Furthermore, REITs are required by law to make substantial distributions to shareholders, which means that they can be a great source of passive income.

Hard Money Loans Can Be ideal for Short-Term Investors

Hard money loans are essentially private loans used to renovate or improve a home. They are typically used by those who are looking to flip a property within 30 to 90 days and don’t have access to traditional credit markets. These loans often come with rates as high as 18%, which is comparable to a credit card. Typically, the property is used as collateral, which makes this type of loan safer than it might seem at first glance.

Plots of Land Will Always Be Valuable

Developers are always looking for plots of land to build homes, offices and other buildings on. If there are minerals, natural gas or other resources under the ground, your land will be even more desirable. As vacant lots take relatively little effort to maintain, they can be ideal for those who want to buy property in multiple cities or states across the country.

Commercial Properties Can Provide You with Long-Term Returns

Owning a commercial property can be beneficial for two reasons. First, tenants who find a location that they like tend to stay for years or decades at a time. Second, they are generally responsible for paying taxes, insurance and maintenance costs. This means that your role as a landlord can be little more than collecting a rent check each month.

It’s worth noting that apartment buildings are generally considered commercial properties even though you rent to individual tenants. Although their monthly rent generally covers insurance, maintenance and other costs, you are typically responsible for making sure that the premises are safe to occupy.

You can enlist the help of a commercial property management firm Salinas CA to help oversee properties in that area. This can be ideal whether you live in Salinas or live in another city or state thousands of miles away. A property management firm can look for tenants, screen them and take care of any issues that might arise. If necessary, a management firm can also collect the rent each month and take care of other tasks that you don’t want to or can’t do on your own.

Residential Properties Can Provide You with Multiple Streams of Cash

It’s not uncommon for a person’s first real estate investment to be the purchase of their own home. After acquiring a property, you can finish the basement to create a downstairs apartment or simply rent that third bedroom that you don’t need for anything. If you buy a duplex, you can live in one side of the house while renting out the other side.

You can also use this same strategy with multifamily homes as you can live in one unit and rent the rest out. Depending on how many units the home has, it may be possible to pay the mortgage and make a profit just from the monthly rent checks. You may also be entitled to tax breaks associated with renovating portions of a residence that are used as rental space.

Properties May Be Zoned as Both Commercial and Residential

Buildings that are located in urban areas may be zoned both residential and commercial. For example, you may have an apartment unit that is above a bar or some other type of small business. In some cases, the owner of the company will rent the unit as a way to cut down on transportation and other living costs. However, you can rent to separate tenants if that is what you need to do to avoid vacancies.

The real estate sector offers multiple opportunities to make money regardless of your risk tolerance and time horizon. However, it is important to understand that any type of investment comes with the risk of losing capital, and it also comes with potential liability issues. Therefore, it may be in your best interest to consult with a financial adviser or to hire a property management firm to help minimize your risk.