Making an investment often seems like a gamble, especially in this day and age. Having the money and the guts to take the plunge but never knowing if it’s going to pay off? Property investment is often hard to tell whether or not it’ll pay off. Buying the property, paying for its upkeep, and taking the risk with tenants who may or may not make it worth your while.
However, there are several ways to invest in property (and earn all of the benefits that come with that) without actually having to buy the property yourself. We are going to take a look at how to become a real estate investor without taking the risk of purchasing large swathes of property. So without further ado, let’s take a look at how to invest in real estate without buying property.
- Before You Invest: Know the Risks Of Investing in Real Estate
- Follow the Money: Insider Information to Consider
- Understanding the Goal of Your Property Investment
- Final Thoughts
Before You Invest: Know the Risks Of Investing in Real Estate
Every type of investment has its risks. That’s what makes it just as thrilling as it is profitable. Sometimes, the higher the risk, the greater the reward. But always know whether or not you’re willing to take that risk. If you buy physical property, anything that might affect your real estate investment return could also affect your return if you invest elsewhere.
Knowing what the big-time investors are up to and all of their tricks can help you become smarter at risk assessment and eventually smarter at investment. Capitalist Exploits Insider allows everyday investors to have access to the personal investments of hedge fund managers, as well as guidance on how to best invest your own capital.
You can even get advice directly from money managers whose entire goal is to help you get upwards of 10x return for your investments with minimal risk. This membership service is perfect for investors of all experience levels, backgrounds, and locations.
If you’re not looking for something as long-term commitment as a membership, you can get a lot of good information from the Capitalist Exploits blog as well.
Real Estate Investment Trust
A real estate investment trust, or a REIT, is a company that manages and owns assets related to real estate, like mortgages or mortgage bonds. The main goal of a REIT is to provide a flow of money to its individual investors. This is a great way to get into the real estate game without having to gamble on purchasing your own property while also growing your portfolio and providing yourself with tangible cash assets.
What better way to invest in property and investing in the construction companies that build those properties? There will always be homes that need building, remodeling, or what have you. It’s important to take a look at the company as a whole and see where they’re invested in building new homes and neighborhoods. Companies that invest their energy into places with sound real estate performance are the best ones to invest your money in.
Real Estate Mutual Funds
Another way to get into the real estate game without putting down the money for property is by investing in real estate mutual funds. Mutual funds are pools of money by many individual investors that go together in a collection of stocks or bonds in a single fund. There are generally low costs with high returns on investments.
Invest in a Development
Housing developments are a less risky investment than simply buying property and investing in your own ability to get returns on that. Being able to finance an entire neighborhood presents an immense potential on the return of those investments, especially if you’re investing in a development being built in a neighborhood with a good real estate market. The process is much more hands-off than owning your own property and offers little risk for high reward.
Real Estate Company
Unlike investing in a REIT or development, investing in a real estate company allows you to invest a little more directly in real estate without owning a property. These companies buy, manage, sell, and rent real estate for you, while all you do is offer money for investment and wait for a return. These real estate companies could also extend to timeshares, hotels, and even resort operators. Always be aware of the company you’re doing business with, though: they should have a track record of success with their investors.
Real Estate Notes
Instead of buying up physical property that you then have to manage and deal with, why not skip all that and just head straight to the banks? Investing in a real estate note means that you’re buying up old debts for a fraction of what a retail investor would pay otherwise. While real estate notes have significantly reduced risk and a higher reward, you still want to make sure you know what you’re getting into.
Be the Money Lender
Admittedly, this method has high risk but also comes with a potential for high rewards. It works best if you have real estate agents you trust and can work with closely. If you’ve got cash to spend, you can invest in real estate by becoming a lender. This works for properties that are going to be flipped and sold for a profit. Lend the initial low-cost purchase, let someone else do the hard work, and cash in on the profit when the home is flipped.
Follow the Money: Insider Information to Consider
For both new and veteran investors, it’s important to know where the good investments are. Especially if you’re looking into investing in real estate, you need to know where the money is going. Connecting with other investors in the business is the best way to figure out what you should be doing, especially if you’re new to investing.
There are plenty of “insider” memberships and products that don’t really give you the service that you’re paying them for. Thankfully, we’ve rounded up some of the best insider services for investing: the real deal, raw and unfiltered, just like you want.
Hedgies Uncut is a service that puts you in the position of a fly on the wall for hedge fund manager discussions. These are the types of things that you don’t usually get to see discussed out in the open: sanity checks on investments so that you don’t follow hype that has no follow-through; ideas, tips, and tricks on direct trading; market commentary that doesn’t have to be filtered, so you know what the real deal is.
Understanding the Goal of Your Property Investment
Finally, investment takes goals. You need to be able to justify your investments in your portfolio to manage your wealth and put yourself, and even your family, in the best position to ride out whatever financial crisis may come your way. Know exactly what your plans are when you invest in real estate: whether it’s to provide stability, a source of income, or to reinvest and grow your wealth.
Insider Weekly is a service that allows investors to get a weekly report in their inbox every week, full of the best investment ideas straight from the inside, as well as trade crafts and a general commentary on the investment markets day to day and week to week. Insider Weekly can help you figure out exactly where you want your money to be going, and what goals you’re looking to achieve.
For example: investing in a REIT has a high payout, but knowing your goals is essential because a REIT is considered regular income. You’re going to be taxed for your REIT payouts far more than you would be for other capital gains. This is why knowing your goals is such an important part of the process and how connecting with other investors can help you smooth out all of the kinks before you dig yourself into an investment hole you don’t want to be in.
All in all, there are several ways to get into the investment game when it comes to real estate without having to put time, energy, and money into a property that potentially has a higher risk and a lower reward. While many investors can create a good portfolio off property alone, it’s easier for new investors to get involved without purchasing a property of their own.
All you need to do is find out the risks of each type of investment and know your future goals with your portfolio. There are plenty of ways to get insider information from real investors and hedge fund managers to see where their money is going in real-time.
Additionally, we always recommend that you follow the advice of professionals who have many years of experience and proven results in the industry. Follow the money and you’ll start seeing the best kinds of returns on your new investments. We hope you have gained a bit more information to consider when it comes to investing in real estate. Good luck and we hope you will have a successful journey.