The most traditional route, when it comes to real estate investing, is to purchase a property and then either wait for its appreciation or to build home additions or upgrades to see its value rise. Of course, that’s not an option for everyone. Here, we’re going to look at how you can invest in real estate much more cheaply. You don’t need as much funding to get your start with the following options.
Making REITs your friend
Short for real estate investment trust, REITs are effectively mutual funds that are run specifically for the purpose of investing in real estate properties. As a mutual fund, it takes money from a range of investors and invests it in not one property, but with a series of real estate investments. You don’t technically own the real estate you invest in, this way, but rather you own shares in real estate projects that the REIT invests in, and get a share of the returns from the profits on said projects. One of the big advantages here is how liquid these assets are. You don’t need to sell any property to get your money back, you just need to sell your shares.
Own part of a property instead
If you don’t like the idea of investing in real estate but not having any tangible assets, then you might want to look at becoming a real estate syndicator, instead. Real estate syndications are effectively groups of investors that pool their money together to buy real property, which is then handled by a manager. You can look at these 10 steps you need to know. While syndications aren’t the most easily liquidated of options, because you have an ownership in part of the property itself, the returns can be much higher than investing in REITs.
Get into real estate crowdfunding
Most REITs are public and reliable, but you could get into the world of private sector investment as well. Real estate crowdfunding sites allow people to get into what are effectively crowdfunding REITs. There are crowdfunding sites that allow you to manage an entire portfolio of these investments. However, private REITs do tend to be riskier than the traditional option, so bear that in mind.
Get into wholesaling
Wholesaling allows you to find off-market sellers and then buy their property at a set price, typically lower than the value they would get if they sold their property on the open market. Shortly after, you find a buyer to pay the cash to take the property wholesale off your hands. Wholesaling is designed to enable quick transactions, where you’re buying and selling property for a higher price without having to wait for much in the way of appreciation, due to the fact that you’re selling property below market price. It can be tough to find the properties that will go for that cheap, but it’s a viable strategy when you can.
The more you are willing to invest and the more ownership of a property you have, the more that you stand to profit. However, the tips above can certainly help you get started much more quickly.