We've all heard people talk about investing in real estate. How real estate can be such an excellent tool in establishing financial security and creating generational wealth. However, jumping into real estate investing can be slightly intimidating and off-putting. Locating the perfect property to buy, fixing it up, putting it back on the market, and then waiting for a buyer can become quite time-consuming. If you decided to rent out the property, the idea of managing tenants and becoming a landlord, on the top of dealing with your everyday life, might be a HUGE area of concern for you.
Fortunately, there is more than one way of going about things & real estate investing is no different! So if you're looking to invest in real estate but you're not interested in the idea of becoming a landlord or house flipper, then keep reading to learn 3 Simple Ways To Invest In Real Estate!
INVESTING IN REITs!
You may or may not be wondering, what exactly are REITs? REITs stands for Real Estate Investment Trusts. Basically, there are companies or firms, that own and operate different real estate properties ( i.e. rental properties, office spaces, warehouses, etc.). These REITs are publicly traded on the stock market, allowing individuals to purchase shares of said company/firm. Take a look at this article that further explains REITs.
With REITs, you're able to invest in real estate without having to go down the path of becoming a landlord or flipping properties. This may be a good option for those who want a slight sense of what real estate investing is.
BE THE BANK
Say you have the resources to invest in real estate but not interested in the process of finding the property, fixing it up, and reselling. You can essentially become the bank and provide loans to real estate investors. A Private Money Loan can be described as, an individual or company that lends to an investor or real estate company for the purpose of investing in real estate.
Private money loans can be considered relationship-based because the lender typically knows the investor. For example, you (the lender) has a family friend who flips properties. You decided to lend this friend the funds for their next real estate transaction. The investor then purchases the property, fixes it up, and resells it. In the end, you (the lender) will ideally, end up with a nice return on your investment. Hence the phrase, become the bank.
Like REITs, this option gives you the opportunity to invest in real estate without having to be involved during the purchasing of the property as well as the renovation process.
INVEST WITH OTHERS
Teamwork is the best work, and in real estate, this phrase works perfectly. If you know a group of individuals who want to invest in real estate, pooling your money together can be a great option. For example, you and a group of 6 friends want to invest. Instead of each individual buying a single property, you guys will pool your money together to purchase a commercial space or apartment complex. Whatever you decide to buy, the main goal is to buy a larger property with the potential to earn a greater profit.
In real estate, you have two types of investors; active and passive investors. Active investors are hands-on and involved in all aspects of the buying, renovating, and managing of different properties. On the other hand, passive investors are the opposite. They tend to have little involvement in the dealings and managing of investment properties. Rather, they simply invest and earn a profit from their investment and not by doing the physical work of investing (i.e. buying the property, dealing with tenants, etc).
As you can see, there are alternate ways for you to invest in real estate without committing to the HUGE responsibilities of negotiations, property management, dealing with tenants, etc. It's important to note that BEFORE you do any sort of investing, whether you want to be a passive or active investor, you do the proper research needed. You want to have an idea of what to expect and some general guidelines for investing.
If this article has inspired you to become an active investor, take a look at some of our current listings to see if there are any properties that might interest you. You can also fill out the form on our Contact Page and have a Harkes Associate reach out to you!
Source: BlackEnterprise, Investopedia, & RealEstateTalk