Real estate - How to invest in it

09th November, 2021

Do you wish to invest in a real estate property? Real estate investments have made some of the wealthiest people in the world. Thus, there are more than a few reasons for you to consider this as a top choice. However, Like other investments, real estate is more beneficial when you are informed and well-versed before you put in thousands of dollars. So, here are some tips to help you invest in real estate.


Buy Real Estate Investment Trusts (REITs)
REITs enable you to put your money in real estate without any physical real estate. REITs own commercial real estate buildings, such as hotels, apartments, retail spaces, and office buildings. A good thing about this investment is that it can fetch you a high dividend. Hence, it is one of the most prevalent retirement investments. Investors who do not seek regular income can opt for auto reinvestment of the earned dividends. This can be a great way to boost investments further. However, be careful with your selection of REIT, as the kind of REIT you put your money in could influence the risk factor. The safest bet is the publicly-traded REITs, which are accessible through brokerage firms. However, these will require you to have a brokerage account.

Real estate limited partnerships (RELP)
If you want a diverse real estate investment portfolio, RELP can be an excellent pick. In this case, you can merge your funds with other investors and develop, buy, sell, or lease properties that are not easy to manage or afford independently. Like REITs, RELP have many properties, but there is a difference in organization and structure. Broadly, they are private equity and are not traded on public exchanges. They exist for a specified term, ranging between 7-12 years. In this while, RELP will operate like a small company, formulate a business plan, identify the properties to buy or/and develop, manage, and finally sell at a profit. Once the holdings are dispatched, the partnership dissolves.


Real estate crowdfunding
You can acquire a company or property ownership via platforms with as little as $500, thanks to crowdfunding. The idea is to collect a large sum of money quickly via a pool of individual investors. If all goes well, you are bound to make a lot of money, especially if the company later goes public. However, there are lows associated with this method, too. The annual fee can be as high as 2.5 percent taxes on dividends. Moreover, you might face challenges in selling real estate. Furthermore, you have to be smart at picking excellent investment opportunities.

Become a landlord
This is the most traditional way to invest in real estate. In this, you have to buy a property and lease a part or whole of it. There are many ways to go about this:

  • Purchase a single-family home and rent it
  • House-hacking or buying a multi-unit building, living in one of the units, and renting the others
  • Renting a part of your home
  • Buying a condo