From the outside, it might seem like the complications and thankless hours of owning real estate might not make it worth it. Or, real estate investing might just seem too complicated. But neither is true! Real estate investing can be an easy way to earn money. Can’t afford to simply buy a house and rent it out? No worries! Here are some more accessible ways to begin investing in real estate…
Buy REITs
Real estate investment trusts, also known as REITs, are very similar to mutual funds. However, instead of investing in stocks and bonds, groups of investors use their money to purchase commercial real estate like offices, hotels, and apartments instead of personal homes. Now, at first, since REITs can be traded on the stock exchange, it might seem more complicated. However, research is your best friend here. Look for companies that have done an excellent job historically at providing good returns, create a brokerage account, and begin investing!
Invest Through An Online Platform
Already have some experience investing online, through platforms like Prosper and LendingClub? Well, there’s also online real estate investing, and it works similarly to the usual investing. Online real estate platforms, like Fundrise, help pair real estate agents or builders with the investors they need to make their projects a reality. Of course, take note that these platforms and investments are not always funded and can often require a lot of money to start with. In fact, most of the good ones are only suited for accredited investors who have an income of $200,000 for each year or have a net worth of at least $1 million. However, sites like Fundrise will often still save investors thousands over purchasing property on their own.
Consider Rental Properties
One-off rental properties can be a great way to learn more about investing in real estate and gain some stable cash. For instance, college student Tiffany Alexy fond this out on accident. As a student, she bought a home with a spare room just because she wanted to buy instead of rent. And then she realized the extra bedroom would be a fantastic source of income. “I went on Craigslist and found a four-bedroom, four-bathroom condo that was set up student-housing style. I bought it, lived in one bedroom, and rented out the other three,” Alexy said. In investing circles, this strategy is known as house-hacking.
The income didn’t just cover Alexy’s everyday spending but also brought her some extra money – far more than enough for a 21-year-old student. Now, after six years, Alexy owns five rental properties and the Alexy Realty Group in Raleigh.
As for fixing all the issues in the rented place, either do it yourself or find a property manager. However, “if you manage it yourself, you’ll learn a lot about the industry, and if you buy future properties, you’ll go into it with more experience,” commented David Meyer, vice president of Alexy Realty Group.
There’s another way to rent out a room, and it can be done by the service like Airbnb. It’s way less risky but won’t bring in as much income as house hacking. Still, by keeping one room clean and decorating it nicely, it can be a popular place to spend a few days in for visitors.
Sources: NerdWallet, Investopedia.