Did you know that the average price to buy a home in the United States was $436,800 in the first quarter of this year? But it’s one thing to save a down payment, get financing from a bank, and buy a home for yourself and your family. It’s another thing to buy an investment property.
You’re not alone if you’re interested in buying a rental property, finding tenants, and collecting monthly passive income. Even so, the asking price for an investment property is cost-prohibitive for many. The good news is there are other ways to invest in real estate that won’t break the bank.
Keep reading for a look at four ways you can invest in real estate.
1. Buy a Rental Property
When most people think about investing in real estate, they tend to envision buying rental properties. Before taking the plunge, you’ll want to ensure you have the financial wherewithal. It’s not just about saving the cash or securing financing to pull off the deal. You also need to budget for maintenance and repairs. Otherwise, your dream can become a nightmare.
If you buy a home that needs to be renovated, be mindful of any work that might expose you to asbestos. Breathing it in can lead to mesothelioma, a rare and aggressive cancer. It usually takes decades for symptoms of the disease to materialize. Consider leaving reno work to the professionals if you’re not absolutely what you’re getting yourself into.
Professional contractors have the experience and expertise, the processes and the procedures, and the equipment and the tools to ensure the job is done correctly the first time around.
2. Real Estate Investment Trusts
How can you invest in real estate without paying an arm and a leg? One way is by investing in real estate investment trusts (REITs). It’s a way to invest in real estate without actually going through a traditional real estate deal. REITs are corporations that invest in income-producing properties.
You can buy units in REITs on stock markets. REITS pay dividends every month. So, in addition to holding onto the units, you’ll get dividends. There are REITS in many different segments, so do your research and find the ones that align with your investment goals.
3. Real Estate Crowdfunding
Yet another way you can invest in real estate without spending hundreds of thousands of dollars or more is by purchasing real estate on a real estate crowdfunding platform. Find reputable real estate platforms online and be part of groups that invest in real estate deals.
You’ll be connected with real estate developers who need capital to finance projects. While you’ll have to invest money, you won’t have to table nearly as much as if you were to buy a rental property. It might be the right vehicle for you to start investing in real estate.
4. Real Estate Investment Groups
Another way to invest in real estate is to join a real estate investment group (REIG). You’ll get to own a rental property without worrying about being a landlord. Having to manage tenants isn’t easy. All it will take is one bad tenant to leave you second-guessing the wisdom of buying a rental property.
You can think of REIGs as mutual funds investing in investment properties. An REIG will buy rental units and then permit members of the REIG to purchase the assets.
As you can see, you’ll have several options if you want to invest in real estate. You can try one or more of the options based on your interests and finances. Even if you hope to one day own one or more rental properties, there are other options you can try until you’re ready to purchase an investment property on your own. Real estate investments, with the assistance of real estate investor tools, can be a great way to diversify your income, make a return on your investment, and enjoy passive income.
Founder Dinis Guarda
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