Because it pays! People usually only think of the stock market as the only tool to passively invest money, and see their money grow. But does it? Because of the roller coaster ride of the stock market you never know if you will actually make money or lose money.
In real estate investing, just like any other type of investment there are things to be aware of, and to avoid. Just because real estate is a known good investment does not mean everyone should get involved in the “hands on” side of investing. It would be foolish for someone who already works sixty hours a week, travels quite often, and does not like to do fix it work to invest in real estate to fix up and sell, or even to rent. Perhaps though you have a little money set aside, or in an IRA, and you have wanted to invest in real estate because you know you can make money. Consider investing passively. That is the term used when you invest by lending your money to a real estate investor, to be used for real estate investing. I am not sure I like that term, because no one is passive about their money. You would invest just like you were the bank. You are not an active partner, but a silent partner. Silent that is, unless the terms of the agreement are not completed. In that case you would foreclose on the property just like the bank.
I have been investing in real estate since 2000, at the present I use private individual investors on all my properties. My private lender gets their money whether I made as much as I planned, or not. My lender is first and foremost. Sometimes the money needed for a loan may be as low as $5,000, or in the vicinity of $200,000. There are different needs for different types of property. If I am borrowing for a property that is being fixed up and sold I usually make the loan for a term of one year. The interest on a short term loan is 15%. If the property is sold before the period of one year (which is the norm), I still pay a full year’s interest on the loan. I live and invest in an area that has not seen greatly inflated prices in the past, but steady growth. The last year the appreciation in the real estate market leveled, but did not drop below the value it was, and is now again appreciating faster.