Are you interested in getting involved with real estate investment, but you don’t want the responsibility of actually buying property? If so, you may be surprised to learn that you can get involved with investing in the real estate market without ever having to step foot inside of a property. Here are a few ways to do it.
Real Estate Exchange-Traded Funds
One way to invest in the real estate market is to invest in real estate-themed exchange-traded funds, or ETFs. An ETF is a collection of stocks or bonds within a single fund. They are similar to index funds and mutual funds in that they offer a low overall cost combined with broad diversification. With a real estate-themed ETF, you can invest in stocks that are issued by real estate investment trusts. You can even choose an ETF that specializes in a specific type of property, such as office buildings or hotels.
Real Estate Investment Trusts
Real Estate Investment Trusts, or REITs, are similar to ETFs in that they allow you to invest in real estate without actually owning the property. If you are new to this form of investment, it is generally best to stick with publicly-traded REITs instead of non-traded REITs. In fact, the U.S. Securities and Exchange Commission has warned against non-traded REITs due to their lack of liquidity, lack of value transparency and high fees.
Real Estate Mutual Funds
Real estate mutual funds also give you the opportunity to invest in the real estate market without actually purchasing property for yourself. Many real estate mutual funds offer low cost, low fees and broad diversification.
Real Estate Noes
Real estate notes are another good option if you don’t want to deal with an actual piece of property. When you invest in real estate notes, you essential buy debt at prices well below what a retail investor would pay. You can invest in real estate notes through a bank or through a real estate investor who is actively purchasing new properties.
Online Investment
A growing number of online companies have made it possible to invest in real estate online. Whether you invest in commercial or residential real estate in this way, you can receive cash flow distributions in return for your investment. Some sites that are growing in popularity for this form of investment include Fundrise and Realty Mogul. These sites allow you to invest in a way that is similar to an REIT, with your money being pooled with that from other investors in order to make real estate purchases. Even better, you don’t have to be an accredited investor in order to open an account.
Real Estate Companies
Of course, you could also choose to invest directly in a company that focuses on real estate, such as in a hotel, timeshare company, resort operator or commercial real estate developer. You may also choose to invest in a home construction company. You will want to be sure to conduct due diligence, however, before purchasing stock in any of these companies.
