Real estate? Why should I invest in real estate? That is a common question that many people ask. To help you make your decision, we are going to explore the reasons why real estate should be an important part of your wealth plan.
If buying property is too expensive of an investment for you, it’s not the only way you can add real estate to your investment portfolio You can also invest in real estate by not buying property. There are plenty of ways to have a stake in the real-estate game.
Invest In Real Estate By Not Buying Property
Here are 6 ways you can invest in real estate without actually having to buy any property.
Invest in Real Estate Investment Trusts (REITs)
A REIT, or real estate investment trust, is a company that either owns or finances real estate that produces income. REITs invest the majority of their money into real estate, and it’s how they make the majority of their income.
There are REITs that focus on both residential and commercial property. Most REITs are equity REITs, but some trade in mortgages instead of actual properties. Perhaps most important for you, the investor, is that at least 90% of the taxable income it pays is via dividends to the shareholders. So researching thriving REITs and purchasing shares in them has the potential as a profitable investment.
Invest in Real Estate Mutual Funds
Real estate mutual funds differ somewhat from REITs. Whereas a REIT is an actual company, mutual funds are simply investments pooled together and overseen by an investment manager.
A mutual fund allows investors to have diversified their portfolio both in terms of having a mutual fund and having real estate. Like with other sorts of mutual funds, you can choose ones that are growth-oriented or income-oriented. As a diversified asset, they are designed with the intention of mitigating risk, but they are still vulnerable to the risks inherent in real estate. If a real estate-related risk negatively affects one of the investments in the fund, it’s likely to impact a lot of others too.
Wholesaling real estate is a little similar to flipping homes, but you don’t own the home and you don’t have to front any maintenance cost.
Wholesaling a house means contracting someone who is looking to sell their house, and quickly taking that contract and selling it to a prospective buyer for a profit, which the wholesaler keeps. No fixing up is involved. If you can actually successfully do this, great! There’s much less risk as you’re not putting your own money into the operation. The difficult part of doing this is actually finding a house that has been undervalued on the market that you can manage to sell for a profit.
Use an Online Real Estate Investment Platform
Much like with other sorts of stocks, there are online platforms that help you make real estate investments as well. Often, these investments you make are part of crowdfunding, a way for others to be able to buy property without requiring venture capital. This option tends to be more for those with money to spare, considering the costs necessary to purchase the large property.
Real Estate Partnerships
Some real estate investments require an exorbitant amount of money. Not everyone can foot that. If you’re not the only one involved in the investment, however, it could become more manageable.
Partnerships are a common way to invest in real estate, with each person taking over different responsibilities. Often, this can be used as a way to purchase property at a lower price. You can set the terms – such as simply paying the mortgage, or perhaps handling the down payment for the property. Depending on the terms of your partnership, you may be investing in real estate without doing too much hands-on work of owning property.
Invest in Home Construction Companies
Another real estate-related investment that could be worth your time is companies that are involved in the construction of homes.
The most common question that arises while investing in Real Estate
Is Real Estate a Good Investment?
If you’ve done the proper research on the market and the specific ways you want to invest, real estate has the potential to be a solid investment.