Ways to Invest in Real Estate – With and Without Buying Property

When most of the people think about real estate, all they know is buying and selling the property. However, not all people want to deal in buying and selling real estate directly. In case you are interested in investing, there are many avenues to do so in real estate. It is true that starting out in real estate is costly. You have to raise enough money to buy a house so that you can start your investment. You do not have to own a lot of money with the new options for investment. You only have to determine the option that is best for you. There are also opportunities for those with lots of money to invest.

  1. Real Estate Investment Trust (REIT)

The real estate investment trust is a company that specializes in real estate investment. The company either owns or finances the real estate business to earn profits. REIT was introduced back then in 1960, and since then, many people have benefited. You will find some of the REIT specializing in one thing or the other. There are REITs for a mortgage, mortgage bonds, residential, and commercial property. You can look at all the options then find the investment that gives you the highest returns.

You can invest your money in the REIT and in return receive constant cash flow on investment. REITs are governed by the securities and exchange commissions. All the REITs pay over 90% of the incomes they earn to the shareholders. You will have an opportunity to build your portfolio until you can afford to buy your real estate property.

  1. Home Construction

The good thing with real estate is that it has various facets. Instead of waiting to buy a house expensively, why not invest in building them. Home construction allows you to participate in something you have an interest in instead of buying and selling. Looking at the current trends in the market, experts confirm that there is a likelihood of an increase in home construction in the next ten years. You can take advantage of the situation and invest.

It is vital to consider various elements before investing. Find out where home construction is taking place. Determine whether there is a ready market for the homes. Are the houses being built high end or low end? The questions will help you approximate your returns. Apart from building homes, the companies can rehabilitate the other old houses.

  1. Real Estate Mutual Funds

The real estate mutual funds and REITs are closely related. However, the real estate mutual funds provide you with a wide array of portfolios to invest. An example of such a fund includes the Vanguard REIT ETF which has over 145 different stocks. The other popular one is the prudential global real estate funds. Note that REITs consist of companies while the mutual funds are not a corporation. Mutual funds are merely a group of investors who choose to pool resources together. The group appoints an investment manager to manage the investments.

You can diversify your portfolio as much as you want from mutual funds to real estate. You have an option of choosing investments based on growth rate of the income you can get. The alternative is instrumental in mitigating risk as you have a wide range of investment. Find out more about maximizing your portfolio and real estate investment to minimize the risk of putting all your investment in one. You can participate in mutual funds with as little money as $ 1,000.

  1. Real Estate Partnership

A partnership is another alternative for the people who would like to invest in real estate with no direct involvement. You can come together as a group of people, and everyone can make their contribution. You can find someone who would like to directly engage in the real estate business and become a financier. When you don’t have a lot of money, you can opt to pay the mortgages or a down payment.

  1. Exchange Traded Fund

Exchange traded fund commonly abbreviated as ETF provides an avenue for you to invest. An ETF is a collection of bonds or stocks in a single fund. ETF closely resembles the mutual funds and REITs. They all offer you an option to diversify your investment at a low cost. You are then able to minimize the risk on your returns. Examples of ETF include the vanguard VNQ which offers investments in REIT through the purchase of property and real estate buildings. Another example is IYR which trades in real estate stocks and REITs.

  1. Real Estate Focused Company

The real estate-focused company is the best option if you want to invest in a particular real estate investment. It is straightforward as the only thing you have to do is find the company. It could be a hotel, resort operations, or real estate developers. It does not offer diversification as the REIT or ETF.

Even though the real estate-focused company is an actual corporation, they are different from REIT. The way they operate is different from the way REIT operates. Moreover, a focused company offers way less dividend than REIT offers on investments. Before investing, it is critical to conduct a background check. Confirm the company history and existence to avoid losing your money to unknown people.

  1. Hard Money Loans

Do you have a lot of money and you are looking for a place to invest? You can invest your money in real estate. You do not have to know the basics of real estate to invest. You can find people to do that for you. I’m sure the last things you want is to get the headaches that come with being a landlord or managing the property.

You can specialize in giving out hard money loans to the real estate investors. Let the investors worry about the other issues of management. In return, you receive a percentage of money on returns. Make sure you lend your money to people whom you know well enough. Another alternative is to determine whether the investor is creditworthy so that you have the assurance of getting your returns.

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