Easier Ways To Get Into Real Estate Than Buying A Property
For most people who invest in real estate, they’re going to go the traditional route of buying a property, usually with the help of a home loan. Then, they either flip it or rent it out. However, if you don’t have access to the capital needed to buy a property, that doesn’t mean that you can’t invest at all. Here, we’re going to look at how to get your money working in the real estate market in ways that are much more accessible.
Investing in the industry
The real estate market isn’t driven only by the buying and selling of property, but by a wide sector of businesses that prop the market up. From property developers to real estate agents to home builders, you can look at investing in real estate companies by buying their stocks. Of course, buying individual stocks demands that you do your research into the performance and health of the business, as well as the wider industry. You also want to make sure you have other options in your portfolio for some diversification.
Getting together with other investors
There are real estate investment options that could see you owning a part of a property, alongside other investors. These are called real estate syndications. Effectively, you and multiple other people would form an entity called a syndication with the help of a sponsor (who manages the investment.) The property that you buy belongs in part to every person who invested in it. The only caveat is that these arrangements are somewhat legally tricky, so it’s recommended to work with a firm like https://syndicationattorneys.com/ to ensure they are being run fairly. Otherwise, they have fairly low liquidity but high returns compared to other options here.
Real estate-like assets
REITs are somewhat like real estate syndication. However, rather than buying the property itself, you are investing in the property as an asset, much like a stock. The property belongs to the REIT manager, but you can buy and sell REITs based on the shifting value of the asset. While more liquid than options like syndication, REITs don’t tend to offer returns quite as large. That said, they are one of the more affordable options here.
Invest directly in construction companies
If you have some funds but you don’t want to put them directly into the property, you can instead look at investing it directly into homebuilders. There are lenders like https://www.rocketmortgage.com/ which specialize directly in construction loans. If you live in an area that’s poised for some development or is currently in the midst of growing, then making cash loans to builders and property developers with a set interest rate could help you see some reliable returns. Of course, there is always risk with investing in one specific individual business, so you have to weigh your options carefully.
If you want the highest returns, then buying property is the key. However, the options above can help you get your foot on the market and start growing your money to help you get to that point.