Real estate is a stable, long-term investment that can offer better returns than other asset classes. However, buying real estate directly is challenging and expensive for most people. Fortunately, you can invest in real estate through various vehicles and asset classes that allow you to diversify your portfolio and reduce risk at the same time. In this article, we highlight 5 top ways to invest in real estate so you can make a profit no matter what happens in the coming years. These are all great ways to start investing in real estate if you don’t have a lot of capital right now.
What is Real Estate Investing?
Real estate investing is making money from the ownership of real estate assets. Most people think of buying and selling a property when they think of real estate investing, but there are many other ways to make money from real estate besides just buying and selling. Examples include:
- Investing in REITs.
- Buying income properties and renting them out.
- Investing in mortgages.
- Even short-term home-rental strategies.
Real estate is a very stable investment. Its supply is limited and is not impacted by currency fluctuations, as it is a “hard asset” priced in dollars. It provides a safe and steady income and can be a reliable part of your investment portfolio. However, you need to be aware that making money in real estate isn’t always a quick process, and you may need to have your money invested for several years before you see any significant returns.
Real Estate Investment Trust (REIT)
Real estate investment trusts, or REITs, are traded on stock exchanges like a stock. You can invest in REITs to own a slice of an entire portfolio of commercial real estate assets such as office buildings and shopping malls. REITs are an excellent way to invest in real estate because they are highly liquid, transparent, and easy to manage. These stocks are actively traded on stock exchanges and can be bought and sold whenever you want. When you buy a REIT, you own a share in the underlying properties, so you will receive a portion of the rental income and any capital gain when the properties are sold. You can select a REIT based on the level of risk you want to take on the underlying real estate assets. REITs are highly liquid and easy to buy and sell. They are a good option for beginning real estate investors because you can diversify your portfolio and reduce risk by owning multiple REITs.
Commercial Real Estate
Commercial real estate (CRE) is a rental property used to earn a profit. Commercial real estate is generally considered riskier than residential real estate, but the returns are also higher. Commercial real estate includes office buildings, hotels, warehouses, and retail stores. When investing in commercial real estate, you’re purchasing shares in a partnership that owns the building. Commercial real estate comes with higher management costs, and it may require you to make significant capital investments. However, commercial real estate investments offer more diversification and can be easier to exit when compared to residential real estate investments.
House flipping is buying a house and renovating it before you sell it again. House flipping can be a profitable way to invest in real estate. However, it requires significant upfront capital and a lot of time. If you don’t have the money to buy a house, you can get involved with house flipping by helping a friend with their renovation project. If you want to be a full-time house flipper, you can learn how to improve the design, renovate the house, and fix the plumbing and wiring. You can then buy a home that needs some work and renovate it with the expectation that you will sell it for a higher price. House flipping can be a good investment for people who have a few years to spare since it can take longer to find the right house and renovate it. It also requires significant upfront capital since you will need to pay for the renovation. House flipping can be an excellent way to diversify your real estate investment portfolio since it allows you to invest in many properties.
Online Real Estate Platforms
Online real estate platforms are online marketplaces that connect buyers and sellers of real estate. Both real estate agents and individual sellers list their properties on these platforms. You can use these platforms to find a suitable investment property and purchase it quickly. Most online real estate platforms offer different ways to invest in real estate, such as rental properties, investment in construction, home equity line of credit (HELOC) loans, and mortgages. Online real estate platforms are relatively new but can provide you with a quick and easy way to invest in real estate.
Limited Partnership Investments
Limited partnership investments are like exchange-traded funds for real estate. An investment fund purchases a portfolio of properties and then sells shares to investors. Investing in limited partnership funds is a great way to get started with real estate investment because the fund manager will do most of the work for you. You need to find an investment fund that is a good fit for your investment strategy. If you need any help with real estate investing, you can work with real estate consultants who are experts in all aspects of investing in real estate, such as Eric Brahms, and can help you discover the right path to maximize your investment.
Real estate is a stable long-term investment that can offer better returns than other asset classes. However, buying real estate directly is challenging and expensive for most people. Fortunately, you can invest in real estate through various vehicles and asset classes that allow you to diversify your portfolio and reduce risk at the same time. There are many different ways to invest in real estate so you can make a profit no matter what happens in the coming years. These are all great ways to start investing in real estate if you don’t have a lot of capital right now.