Most people believe that there’s no way to invest in property without buying or owning one. Is that your thought, too? If so, then you’re not right. You can be a property investor without the hassle of being a landlord. Some shy off from real estate investment because of the myth, “it’s a must to buy a property.” The good news is that you can use numerous ways to venture into the real estate business without having to possess a property. Read on to find out how that’s possible. As you go through the tips discussed, remember some lending institutions, such as Bugis Credit, can help you make appropriate investment decisions.
Real Estate ETFs
You can invest in an ETF (exchange-traded fund), a stock, or bonds collection placed in a single fund. It comes in broad diversification and low costs, similar to mutual and index funds. This is an ideal option if you would love to invest in real estate while also diversifying. Since several ETFs offer real estate exposure, you can do some research before deciding on the possibilities to consider.
Invest in REITs
A REIT (Real Estate Investment Trust) is an entity that makes debt or equity investments in commercial/business real estate. REITs allow individual investors to invest in real estate as an asset without owning property directly. The investors own the REIT shares, and the REIT owns its investments.
REIT investors earn profits in dividend form as dictated by the REIT’S equity and debt investments’ performance. Lawfully, REITs are needed to invest 75% of their real estate assets and obtain at least 75% of their gross income. Then, every REIT must distribute about 90% of its revenue to its shareholders.
Private Equity Fund
Private Equity (PE) Funds are also an effective way to invest in real estate without the need to buy a property. They gather capital from high net worth and institutional investors to invest in various asset classes, especially real estate. A management team usually runs these funds, ensuring the security of investors’ funds.
You can enjoy the added security that comes with someone, especially a real estate pro managing your work. Even so, PE funds have the disadvantage of requiring high minimums of at least $250,000. They can also lock up your money for an extended period as their offerings are always above ten years.
Invest in Online Investment Platforms
You can also take advantage of online investment platforms that invest on behalf of several investors. They do so in opportunities that would not be easy to find or very expensive to access. While real investment platforms vary widely in property types, investment offerings, and minimums, online investment platforms focus on either one property type or a collection of residential and commercial property.
Since they pool investments from many investors, these platforms leverage this collective buying power to invest in opportunities that the majority can’t access. They give both accredited and unaccredited investors the capability to invest in a spread portfolio. With them, you can spend a minimum of $500 and get potential liquidity that’s impossible with other platforms.
Real Estate Mutual Funds
These are quite similar to REITs but vary slightly in that the mutual funds are merely pooled investments supervised by an investment manager while REITs are actual companies. A real estate mutual fund enables investors to diversify their portfolios by having a real estate and a mutual fund.
You can opt for ones that are income-oriented, just like you would do with other mutual funds. A good thing with these funds is that they can mitigate any risk except those characteristics of real estate. Whatever happens, using the mutual funds saves you the hassle of having and managing your property while still allowing you to earn.
Though somehow similar to house flipping, with real estate wholesaling, you won’t have to own a home or even worry about maintenance costs. It involves contracting someone with a home to sell, then quickly taking over to find a buyer who purchases it at a profit, which you keep. It’s like land or car brokerage where you help a landowner get a buyer to pay an extra amount of the required. Little risk is involved in this method since you don’t use your money. The drawback is reselling an undervalued house at a profit isn’t easy.
Home Construction Companies
Did you know that even real estate builders are also property investors? This field isn’t only about buying, owning, and profiting from an existing property. You can invest in the companies responsible for the numerous aspects of home construction. You can also start your own home building company. If you believe that home construction will continue to increase as more homes are needed, this should be an excellent investment option.
Real Estate Partnerships
Some investments might be intriguing but are impossible for individual efforts. They probably require vast amounts of money. Partnerships can help carry them out; when you’re not alone, it can be easily managed. With real estate partnerships, every person gets a role to play. Whether you decide to buy or build the property in question, it’s an effective way to invest in real estate without owning it as totally yours.
Start A Brokerage Firm or Real Estate Agency
Since the aim here is to invest in real estate and earn money without buying or possessing your personal property, being an agent or estate broker is smart. By being an agent, you can manage real estate on behalf of owners or sell them at decent commissions. Being an agent requires some little education, but no capital to begin. To start a brokerage firm, you need to get a license and have proper knowledge through extensive training. Yet, if you manage, you’ll be successful in earning from real estate without buying one.
The Bottom Line
Which of the options above is right for you? If you’re interested in real estate investment but not becoming a landlord, this blog has highlighted some viable ways to do so. You can do further research on each method and ask experts before deciding which to choose. Also, if you’re capable, you can venture into more than one option for portfolio diversification.