Everyone is looking to make their money go farther these days, and investing is one way of doing that. Although there are many ways to invest money like art vs real estate, the popular investment and hot these days are real estate investing. One possible reason for the interest in real estate investing is that it’s something everyone needs. Whether you’re a millionaire or a minimum wage worker, you’ll need a place to lay your head. And although real estate investing can be expensive, there are also low-cost ways to invest.
A real estate investment trust, or REIT, is a company that owns a broad range of income-producing real estate, ranging from apartment buildings to warehouses to shopping centers. The structure of a REIT is similar to that of a mutual fund: just as a mutual fund company pools investors’ money to invest in stocks and bonds, a REIT pools investors’ money to invest in real estate assets.
And you don’t have to be a millionaire to invest in REITs. Like some stocks can be bought on the cheap, some REIT stocks can be purchased for less than $10. Of course, you’ll want to do your homework in order to understand if what you’re buying is worth the money or not. REITs are also popular because they tend to pay above-average dividends.
Buy Rental Property
Buying rental property is an excellent way to invest in real estate. One great thing about rental property is that you can manage the investment directly. It’s something you can see, touch, and look after, unlike stocks. Another advantage is that it allows a high return on investment in the long run. Using borrowed capital, you use just a small portion of your own money.
The beauty of renting to tenants is that their rental payments can be used to help pay the mortgage loan in addition to paying for expenses. And then, beyond the cash flow and tax benefits, the property owner has the potential benefit of home appreciation.
Online Real Estate Investment Platforms
Real estate investment platforms such as Fundrise are used by those who want to join other people in investing in large-scale real estate projects. In the case of Fundrise, the real estate team identifies, acquires, and manages the projects in your portfolio on your behalf. An advantage of Fundrise is that it gives people the opportunity to invest in projects from all over the United States.
If you invest with Fundrise you should be aware that liquidity can be an issue, and you should consider it a long-term investment. But you can get started with as little as a $10 investment, which is a lot cheaper than other platforms. An investment of $1,000 will give you access to more portfolio allocations and account features. Fundrise accepts clients regardless of annual income or net worth.
Flipping properties may be something you’re familiar with due to the abundance of TV shows about the topic. Investors often purchase rundown properties at a reduced price, fix them up, and then sell them for a profit. What’s known as house-flipping began in the economic recession of the 1980s and has ebbed and flowed depending on the market. Although some people make a living house-flipping, it’s more challenging in today’s market.
The key to being a successful house-flipper is finding a home that will ultimately sell after all the work you put into it. You want to look in an up-and-coming area where houses are selling quickly. Also, know the area. You don’t want to buy a house to flip and then find out the area is mostly rentals. This wouldn’t be desirable for someone looking to buy.
Many people find that real estate is one of the safer options when it comes to investing. One reason is that real estate is an asset that everyone can benefit from. Whether you’re investing through REITs, purchasing a rental property, or flipping houses, you may take a bit more comfort in knowing that you’re investing in a physical asset that has intrinsic value due to its physical properties. This can’t be said for every type of investment.