Over the course of the last 50 years, real estate investment has become increasingly popular. When done right, real estate investment can be extremely lucrative, additional income stream. The real estate industry does offer the potential for substantial rewards; however, not all investment types are right for all investors. So how can you determine the right investment for you?
Start with a realistic mindset. Before you dive into investing, you need to have a practical understanding of your income, expenses, and goals. Investment returns aren’t guaranteed right away, so you could go a few months without seeing a profit. Combining your income and expenses, determine an investment goal that is right for you. For example, if you don’t have the funds to cover the maintenance of a four family home until the mortgage is fully paid, you should invest in a smaller property.
Research Options. It is no secret that the internet and new technology is drastically changing the way we do just about anything. The real estate investing world was no exception. Although, this news is not bad for investors. It means that real estate investment is not limited to hands-on owning residential or commercial rental properties. Once you’ve decided which type of investment, hands-on or passive, is best for you, begin researching options within that investment type.
Real Estate Investment Groups. A mutual fund is an investment program funded by shareholders that trade in diversified holdings and is professionally managed. Real Estate Investment Groups are the mutual funds of rental properties. This could be an excellent choice for an investor if they want to own rental property, but do not want the responsibilities of a landlord. Typically, in these type of investments, companies will build or buy apartment blocks and sell to investors. The lease would be in the investor’s name, but the company handles the maintenance and tenant issues, such as vacancy, interviews, etc.
Crowdfunding: Realty Shares & Fundrise. Crowdfunding is a new tool for raising money that allows more people to become investors. The idea is for large sums of money to be raised by small investments from hundreds to thousands of investors. New laws around crowdfunding have allowed for websites to emerge offering investors access to real estate projects.
Realty Shares. This online investment platform brings investors, sponsors, and borrowers altogether. It offers a variety of property choices for investors, from smaller single-house flips to more massive rental complexes. Only accredited investors can invest with realty shares. The qualifications can be found here. Investors are required to invest a minimum of $5,000 and can choose what they fund, such as existing properties, loans, or equity investments.
Fundrise. This online investment platform focuses on commercial property investing. Using eREIT (hybrid real estate investment trust), this platform offers lower investment fees. Investors can search through a list of investment funds to choose the one best for them. When you purchase an investment trust, or eREIT, from fundrise, you are directly buying through the issuer of the trust. Investors do not need to be accredited for this site, and the minimum investment is $1,000.
Crowdfunded-platforms, such as Realty Shares and Fundrise, are a great way to get started in the real estate market and make passive income without investing hundreds of dollars and time to the property.