If you want to invest in real estate or just diversify your portfolio you can do so fairly easily. Here’s how to invest in real estate without owning real property.
REITs
REITs are real estate investment trusts which are a way to invest in real estate in the same way you would invest in a stock.
There are two main types of REITs. The first type is an Equity REIT. This type of trust owns several different kinds of properties like apartments, commercial shops and more that the shareholder can profit from.
The second type is a Mortgage REIT. A mortgage REIT is used to finance properties and the returns are based on the interest paid by the debtors.
Since REITs are listed on the stock exchanges they are a generally easier way to get started investing in real estate.
Crowdfunding
Crowdfunding has been revolutionizing the banking system over the past several years. Long gone are the days where buyer’s only options are to get financing from the bank. Now, instead, you can get financing from your peers.
This is ideal for both buyers and investors.
Buyers reap the benefits of getting financing even if they are considered too high risk for the bank. Investors have the ability to spread out their loans through multiple accounts and charge a higher interest rate than banks due to the slightly riskier nature of the loans.
Crowdfunding is now making its way to real estate investors.
Here’s how it works.
You can apply to be an investor on a site like RealtyShares.com and browse through hundreds of different profiles of real estate investors needing funding. The funding is for all kinds of different projects with different interest rates based off of factors like risk.
You can start with as little as $5,000 and spread your investments among different individuals in different asset types and locations.
Your return will obviously depend upon the portfolio that you build for yourself.
You Don’t Have to Own Real Property
If you want to invest in real estate without any of the headaches that come with managing real property one of these ideas could be a great way to get started.