There are a lot of reasons to be scared away from investing in real estate.
Maybe you think its something only super wealthy people can do.
Or maybe you think youll have to become a landlord and deal with tenant emergencies 24/7.
Getty Images
But there are lots of ways to invest in real estate.
You dont need to be mega rich.
You dont need to become a landlord.
You dont even need to own physical property.
Lets talk about how to invest in real estate, regardless of your goals and budget.
Should You Invest in Real Estate?
But like any investment, it has advantages and disadvantages.
Here are a few to consider.
7 Ways to Make Money if You Hate People
Do you avoid people too?
Enough small talk.Here are some waysto earn extra cash, without all of the social stuff.
Our first nine options are for aspiring real estate investors who DO want to buy property.
Buy a Home
The simplest way to invest in real estate is bybuying a home.
Theres no guarantee your homes value will increase, but historically speaking, buying a home has paid off.
Countless studies show that homeowners have more than 40 times the wealth of renters.
Forget the idea that you need a 20% down payment.
Becoming a landlord isnt just about collecting rent each month.
Youll need to screen potential tenants and work with an attorney to draft a lease agreement.
Keep in mind: People tend to be rougher on property they dont own.
Flipping Houses
If you watch HGTV, you may think you know a lot about house flipping.
Anyexperienced house flipperwill tell you that the TV version is a lot different from the reality.
House flipping is less about extreme home makeovers and more about research and number crunching.
Just finding the right house involves a lot of work and competition.
Plus, getting financing isnt easy.
But major repairs arent always necessary.
Some house flippers simply buy a property in an area where real estate prices are appreciating.
They hang on for a few months, then sell it for a profit without changing a thing.
Plus, youd better like your tenants, since theyll be your neighbors.
House hacking can be a good way to invest in real estate without a big down payment.
In some cases, you might even use your expected rental income to help you qualify for the loan.
Buy a Vacation Property
Buying a vacation rental can pay off in multiple ways.
Plus, platforms likeAirbnbandVRBOmake it easy to market your property.
The next three options are for real estate investors who DONT want to buy a property.
REITs then sell shares of those real estate investments to outside investors.
There are three main types of REITs:
REITs often specialize in a certain pop in of property.
you’re free to make the purchase using yourbrokerage accountorRoth or traditional IRA.
REITs are required by law to distribute 90% of their taxable income to their shareholders.
That means shareholders usually earn above averagedividends, which makes REITs a good source of passive income.
For a broader mix of investments, you could buy a real estatemutual fundorETF(exchange-traded fund).
Examples include:
9.
Crowdfunding Platforms
If youve ever encountered a viral Kickstarter campaign, you know how crowdfunding works.
When you invest in real estate crowdfunding, youre usually investing in a single project.
That makes it a high-risk, high-reward investment.
But some online platforms allow ordinary investors to invest in crowdfunded real estate.
Should I Invest in Real Estate?
Youll also avoid sinking too much money on closing costs and other fees.
The best way to invest in real estate is to do so slowly.
As Mark Twain once said: Buy land.
Theyre not making it anymore.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder.
She writes the Dear Penny personal finance advice column.
Send your tricky money questions to[email protected].
No Interest Til Almost 2027?
Balance Transfer = Credit Card Cheat Code
