7 Ways to Invest in Real Estate

Investing in real estate the right way can help you increase you capital very quickly! But what is stopping you from taking the first step? Is it the idea that only super rich people can invest in real estate? Or you need to become a landlord and bear the trouble of hosting tenants? Well, there are other ways for you to invest in real estate without being a mogul or a landlord! 

Invest in a house

This is the simplest way to invest in the real estate. It is always advantageous to own a house instead of renting it. If you are worried about a 20% down payment, consider these options below:

FHA loans: at 3.5% down payment for credit scores >580

VA loans: 0% down payment (you might need to be pay a 2.15% funding fee)

USDA loans: 0% down payment for credit scores >640

House hacking

If you want to make an investment in a house and also want to derive income out of it, the best method is house hacking. For example, buying a family home and renting a part of it. But there will of course be the troubles of housing tenants! However you can get a FHA loan with 3.5% down payment if you have four units or less than that.

Invest in vacation homes

Investing in a vacation home is definitely is good long term investment. They have higher appreciation values and can be rent out seasonally. This way you can get more income, as short term rates are higher than long term rates. The location of your property can also help you to market your property through platforms such as Airbnb.

Invest in REIT

A REIT is an acronym for real estate investment trust. A REIT invests in properties such as apartments, hotels, shopping centers and warehouses. Most REITS are just like stocks and are publicly traded. Investing in REITs is a good passive income as the dividends are above average.

Invest in ETF or real estate mutual fund

An ETF (exchange-traded fund) or real estate mutual fund is basically a broader spectrum of the REIT. REITs focus on a specify type of property which doesn’t allow you to diversify your investment. Both these type of funds actually bundle together many REITs. The major difference between the ETF and real estate mutual fund is that the former is traded in stock market, whereas the latter can be bought directly.

Invest in real estate related stocks

If you indirectly want invest in physical property without owning a property, the best way to do so is by buying stock of companies that have a good real estate market. They can be:

  • Real estate brokerage
  • Homebuilders
  • Online real estate companies

Invest in crowdfunding

When multiple investors invest in a single property, it is known as real estate crowdfunding. There are certain pre-requisites that need to be met to be able to invest in a real estate crowdfund, such as having a net worth of $1 million (excluding your house). Though the risk associated with crowdfunding is high, the reward is also high, thereby making it a lucrative investment!

Investing in real estates in a smart way is a good way of generating wealth. If you plan well, invest slowly and are available for a long term, it will be a very good investment! Just keep the above tips in mind and make you first investment! 

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