It is likely that you envision purchasing a property to rent or buying and flipping a house when you think of real estate investing. The down payment and closing costs associated with either of those options can range from 7% to 17% of the sale price in 2021, which puts you in the financial hot seat.
Moreover, you’ll have either to handle the headaches of renting a property out or deal with the hassles of fixing and flipping it.
In spite of the fact that real estate investments can be very lucrative, starting out requires a substantial amount of capital and time. However, there are still other ways to invest in real estate without owning a property if you don’t have the time or money to manage one.
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Does It Make Sense to Invest in Real Estate Without Buying Property?
Real estate investors are typically thought of as those with multiple rental properties that they manage 24/7, as well as deal with tenants and maintain their properties on a regular basis. It may be a viable and profitable real estate investment strategy, but there are a variety of other options available as well.
People often hesitate to invest due to concerns about finances, risk, or not knowing how to go about it when it comes to purchasing a property.
But then, even without buying a property, you can still invest in real estate in many different ways. The following are some of today’s best ways to make an investment without buying an actual home or building.
Real Estate Investment Trusts
A real estate investment trust (REIT) is an investment company that invests in property rather than owning and operating it.
It is one of the best ways to gain experience in commercial real estate investing without spending a lot of money. Investing in a REIT can cost as little as $10 to $100, compared to a rental property down payment of $10,000 or more.
Real estate properties are purchased with the money you invest with other investors. As a shareholder, you get to benefit from the physical assets, which generate cash flow and appreciation.
There are many types of REITs, most of which specialize in a particular kind of property:
- Multifamily housing
- Office buildings
Real Estate Mutual Fund
Real estate investors face a major challenge when it comes to diversifying their investments. However, it is not hard for a retail investor to find a wide variety of investments in the stock market. A diversified portfolio can be attained at a reasonable price point by purchasing shares of many companies at low prices.
In order to diversify their real estate portfolios, investors can turn to real estate-focused mutual funds, and the majority of these are invested in real estate stocks—just like traditional mutual funds. REITs or direct real estate purchases are also popular among others.
Real Estate Notes
The purpose of buying real estate notes is to invest without dealing with the actual buildings. Investors who invest in real estate notes through banks typically buy debt for much lower prices—than retail investors would.
In any case, you must ensure that you know what you’re investing in. Whether you’re investing in notes with a bank or a real estate investor actively looking for properties, conducting due diligence is always a good idea.
Real Estate Syndication
For those who desire to invest in real estate but do not own property, real estate syndication is the last option.
It is a process in which multiple investors buy a property together as lenders, just like crowdfunding. Property is then purchased with the collected money, and the income generated by the property is divided into shares or units.
It is your responsibility as a syndicator to collect funds, find and acquire properties, and manage the whole process. This is why an accredited investor status is necessary.
Get the Best Deal on Real Estate Investing
The real estate market is one of the most stable investment assets that can provide passive income and create wealth.
Investing in property makes sense if you have the funds or can afford a loan. You can, however, confidently invest and make real estate a part of your portfolio once you have a good understanding of your investment goals and how real estate plays a part.
If you do your due diligence and work with a professional company, residential and commercial real estate investing can provide passive income. Get more resources about real estate investing by visiting our website. Interested in starting out your real estate investing? To get started, send us an email at firstname.lastname@example.org or call 949-881-7128 at Saint Investment Group today!
President of Saint Investment Group
Nic is a two decade seasoned expert in investing and capital raising, specializing in Real Estate and debt markets. With Saint Investment Group, he leads large-scale distressed asset purchases and innovative syndications for investors.