How to Invest in Real Estate Without Owning Property

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It may surprise you to learn that not all real estate investors are comfortable wearing landlord hats.  Not everyone is ready to become a house flipper or new age land baron. Some simply do not want the responsibility of owning, managing and maintaining properties while others lack the capital and/or liquidity to purchase property on their own.  The good news is that there are still many options for investing and earning healthy returns in real estate without actually owning property in your own name.

REITs

Real Estate Investment Trusts (REITs) are companies that invest directly in real property and mortgages and then offer ownership shares to fund managers and individual investors in the same manner that stocks are bought, sold and traded.  Equity REITs invest in commercial properties, apartments and office building while mortgage REITs purchase mortgages and mortgage-backed securities. REITs are by their very nature attractive to investors looking to diversify their holdings and they pay back investors through dividends.

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Real Estate Mutual Funds

Real Estate Mutual Funds are mutual funds whose primary focus is investment in public real estate entities such as REITs.  Like any mutual fund, these real estate-focused funds operate under the direction of fund managers and are subject to management fees that vary considerably.

Wholesaling

Real estate wholesaling involves identifying undervalued properties (usually owned by sellers looking for a quick sale), acquiring contract rights to the property and then assigning the contract rights to a buyer (often contractors willing to do extensive renovations).  Wholesalers earn a percentage of the selling price, but finding undervalued properties and then matching them with the right buyer is often a time-consuming proposition.

Crowdfunding (or Micro-Investing) Real Estate Platforms

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In recent years, crowdfunding platforms such as IMBY have revolutionized the way individual investors get started in real estate.  For the first time in history, micro-investors can target their own properties and assemble a portfolio that matches their budget and investment objectives – all while steering away from any projects that do not complement their worldview.

All of the above real investment vehicles provide investors with excellent opportunities to achieve income from cash flow, long-term asset appreciation, inflation protection and investment portfolio diversification – while completely avoiding the more mundane duties that go along with being a landlord.   Crowdfunded micro-platforms differ from the others in that these vehicles allow investors to get going with little money down. With IMBY, as little as $1 will get you in the game.

 

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