Did you know that you can invest in real estate without buying property? It is indeed possible to invest in real estate whether you buy property or not.
Despite all of the creative ways to invest in real estate, you’re likely to fail as an investor. Real estate investors often choose the wrong investment vehicles to begin with, forcing them to lose money and their business in the process.
Do you want to know the different ways to invest in real estate and make money? Check out these real estate investing strategies.
Sound Real Estate Investments Without the Property Headaches
There are generally two ways to invest in real estate, buy property or make real-estate related investments that don’t involve you buying property.
Which ones you decide to go with is a personal preference. Some real estate investors prefer not to have property, even though they’re profitable.
There’s a lot that goes into owning a property, such as maintenance, property improvements, dealing with tenants. Sure, you can hand a lot of that off to a property manager, but you’re ultimately responsible for everything as the owner of the property.
With other types of real estate investments, you can invest in real estate without having to deal with the responsibilities or headaches of owning property.
1. Real Estate Trusts and Mutual Funds
These are investment indices and trusts that you can invest in without having to hold property. With these options, you can diversify your investments, which gives you more flexibility and lowers your risk as an investor.
You’ll need to educate yourself on the different types of real estate investment trusts (REITs). You also want to be sure you invest in publicly traded REITs because the Securities Exchange Commission warned investors about the risks of investing in privately owned REITs.
2. Invest Wisely in a Real Estate Focused Business
Do you know that there are neighborhoods going up all the time? One area in Oregon was creating a brand new neighborhood of over 8,000 homes for 20,000 people.
Developments like this are happening everywhere and there are several home builders that are doing the bulk of the work. Companies like DR Horton, Pulte Homes, and LGI Homes are just a few examples of home builders you can invest in.
3. Direct Loans to Investors
You can loan your money to other real estate investors and not have to be concerned with everything that comes with owning a property. All you do is front the money expecting a percentage of return and the real estate investor does all the work for you.
4. Real Estate Crowdfunding
Did you know that you can invest in real estate online? There are crowdfunding sites that allow you to get started with as little as $500. That type of real estate investment is affordable for everyone and you can dip your toe in the water to see if it works for you.
Other Ways to Invest in Real Estate
The great thing about real estate investing is that you don’t need a lot of money to get started. If you do prefer to have a tangible asset, investing in real estate properties is a good option for you.
Yes, there’s a lot that goes with it, but real estate investing does provide a secure shelter for your money. Here are some other creative ways you can invest in real estate that involve buying property.
5. Flip Homes
You know you want to secretly want to be the next HGTV house flipping star. Flipping homes is a good fit if you have a contracting background. You’ll have to know a lot about the local real estate market and the structural side of homes to know how much work a property requires.
On the downside of flipping homes, you’ll be paying taxes on the profits you make. That’s because they typically don’t qualify for a 1031 exchange. To qualify for a 1031, where you roll your profits into another investment property without paying taxes on the profits, you have to hold the property for appreciation.
With a flip, you’re holding the property to resell it, which disqualifies you.
6. Invest in Rental Property
The primary way investors put their money into real estate is through rental properties.
If you do invest in a rental, you need to be up to date on rental laws and finding good tenants. Tenants will come with a list of questions and you need to know how to answer them.
When you invest in a rental property, hold on to it for a few years and rent it out, you could qualify for a 1031 exchange when you decide to sell it.
There’s a lot to learn about 1031 exchanges and all of these real estate investment vehicles. You’ll want to check out Turner Investment Corporation to find out more about these types of investments.
7. Rent Out Space in Your Own Home
If you’re gun shy about investing in real estate, there is an easy way that you can get started and still make extra cash.
You can rent out space in your own home. You could also have a large property that has a small building or shed that you can convert into an apartment unit to rent out.
Many Ways to Invest in Real Estate
Investing in real estate doesn’t necessarily mean that you have to purchase a property and rent it or flip it. As you can see here, you can invest in real estate just by going online with as little as $500.
With all of these ways to invest your money, do your research before you just throw down your hard-earned cash. After all, the purpose of investing is to make your money work for you.
Want more great investment tips? Check out this article on financial planning.