3 Common Alternative Investments Every Investor Should Know About
July 27, 2020 (Investorideas.com Newswire) When people think of investing, the stock market is often the first thing that comes to mind. However, there is a wide range of alternative investments that provide an excellent opportunity for wealth while also offering varying degrees of personal involvement and risk. For example, choosing an investment opportunity that involves a physical asset, carries a lower risk because the asset can always be sold to recoup invested funds.
Here are three common alternative investments that every investor should know about and offer varying degrees of involvement. You can choose to be a hands-on investor or a silent investor.
1. Real Estate
Real estate has been one of the most popular alternative investment options for generations. Land ownership has always been considered a sign of wealth because the land has value. Even property that is not developed or run down has value. There are many ways you can invest in real estate. First, you can buy a residential or commercial rental property and become a landlord. As a landlord, you can manage the properties yourself or turn everything over to a management company that will run all the day-to-day operations.
Second, you can buy run-down properties, renovate them, and then resell them. This form of investing is often referred to as flipping properties because you never live in them, and the faster you can fix them up and resell them, the more profitable they are for you.
Third, you can buy undeveloped land and either develop it yourself or resell it to developers. Each of these options come with their own risks and rewards. However, overall, investing in property is a good investment with a positive return.
2. Equipment Leasing
Many farms, manufacturers, and large operations rent their equipment because it is more financially advantageous for them. Large equipment is highly expensive, requires specialized skills to repair, and they do not last forever, so the investment is temporary. By renting the equipment they need, farmers and business owners can rely on the rental company for parts and repairs, and they can trade up to a newer machine without the hassle and financial loss of trying to sell the old equipment and buying new.
For rental companies, they can make far more than they paid for the equipment on long-term rentals. However, the initial purchase is still expensive, which creates an opening for an alternative investment option. You can invest in the machinery and equipment that is then leased to farms and large operations. This is a long-term investment strategy, but the risk is relatively lower than others because there is a physical asset that can be sold to recoup your investment should the rental company fail. Additionally, if the renter defaults on payments, the equipment can be seized and rented to a different operation.
Another alternative investment option that is widely accepted and has provided financial success and freedom for millions of people is owning a franchise. A franchise can be anything from an online service to a sit-down restaurant. Fast food restaurants like Taco Bell, Burger King, and Mcdonald's all offer franchise opportunities. Sit-down restaurants like Denny's, Wings Etc., and Coconut Kenny's also offer franchises.
For the companies, offering franchise opportunities is an ideal way to expand nationally without high investment costs or the high risk. For investors, buying a franchise is an opportunity to open and run a business with the support and backing of a large corporation. Franchises offer a win-win investment for both the investor and the company. As a franchise owner, you can choose to run the day-to-day operations, or you can higher a management team to run it for you.
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