Nowadays there are many ways to diversify your portfolio of investments: you can do some online trading, you can buy a mutual fund, etc. and you can invest in real estate. You will be surprised to hear that getting into the market can be very easy.
If you have been tenant you probably never dreamt of becoming a landlord one day: all those calls about bugs, overflowing toilets and so on. Admittedly it doesn’t sound the most exciting job. But if it is done in the right way, you can get a lot out from real estate investment and can provide an additional income stream. Also, it doesn’t mean that you will have to show up at every tenant’s call. One of the main issues is that a lot of new investors don’t have a clue of where and how to invest in real estate: this result in many finding more risky ways of investing like online trading. So below you will see five options which are going from low maintenance to high.
- Buy REITs
REITs, or real estate investment trusts, will allow you to invest in real estate without the physical real estate. This form of investment is frequently compared to mutual funds, and those are companies that own commercial real estate like office buildings, retail spaces, apartments and so on. It is an appealing way of investing for those who don’t need the regular income and can reinvest those dividends to improve their investment further in the future. New investors that are keen to stick to publicly traded REITs can do so via an online broker.
REITs can be different and complex: some trade happen on an exchange like stock while others aren’t publicly traded. The type of REIT that you buy will have a direct impact on the risk you are taking: non-traded REITs are more challenging to sell and also will be more difficult to value. Our suggestion for new investors is to stick to publicly traded REITs that can be acquired through an online broker. To do so, you will need an online broker account, but opening one is straightforward as it takes less than 15 minutes.
- Use an online real estate platform
Some companies connect borrowers to investors that are willing to lend them money for different needs like a wedding or home renovation. In the same way, these platforms do connect real estate developers to investors who are willing to finance projects with a debt or equity. Investors will do so in the hope of receiving monthly or quarterly revenue on the back of taking a risk and paying a fee to the platform. Similar to many real estate investments they are speculative, and you can’t unload them like you would do when trading a stock.
In this case, however, you will need to have quite a fat chunk of money to invest as those platforms tend to be open only to accredited investors that have earned an income of more than $200,000 in every of the last two years or have a net worth of $1 million or more.
- Invest in rental properties
Buying is better than renting so if you have enough money you should consider buying a house and get an income out of the rent. There are many different options as you can also live in your investment property while renting out rooms or units. Alternatively, you can also buy and rent out an entire investment property. In this case, if you don’t want to be the person that shows up with every toilet failure, you should pay a property manager that will look after all those issues.
- Fix up and resell properties
Another way to make money is to buy an under-priced home that needs to be renovated. If you do inexpensively as possible and then resell it, you are going to make a profit. This is also called house flipping and although there are elements of risks it does pay off. In this strategy is very important to find an experienced partner that can well estimate expenses and manage the whole project. The more significant risk with this strategy is that the more you hold the property, the less money you will make as you will be paying a mortgage without having any income from it. One way of lowering this risk is by living in the house while you fix it. If you don’t mind a little dust, this is a good way around.
- Rent out a room
You can also rent part of your home via sites like Airbnb. In this case, you will not have a long-term tenant but you will get pre-screened profiles, and also you will be protected against damages.