Top Strategies for Real Estate Investment

1. Explore REITs (Real Estate Investment Trusts)

Dive into the world of real estate investment trusts (REITs) for a stake in real estate without the hassle of physical property ownership. Similar to mutual funds, REITs are entities that possess commercial real estate assets like office buildings, retail spaces, apartments, and hotels. They often yield substantial dividends, making them appealing for retirement portfolios. For those not seeking immediate income, dividend reinvestment can bolster long-term investments.

    Are REITs a sound investment? While potentially lucrative, they come with nuances and intricacies. Some are publicly traded like stocks, while others remain private. The type of REIT chosen significantly impacts the level of risk assumed, particularly with non-traded REITs that lack liquidity and valuation transparency. Novice investors are generally advised to opt for publicly traded REITs accessible through brokerage firms.

    To get started, a brokerage account is necessary, which can typically be opened in under 15 minutes with many firms requiring no initial investment apart from the REIT’s minimum investment requirement.

    Alternatively, diversify real estate exposure by investing in funds with interests in multiple REITs, achievable through real estate ETFs or mutual funds holding REIT shares.

    Photo by NINA PASCAL on Unsplash

    2. Utilize Online Real Estate Investment Platforms

    Utilize Online Real Estate Investment Platforms Harness online platforms connecting real estate developers with investors keen on funding projects through debt or equity. Investors anticipate periodic distributions in exchange for assuming considerable risk and paying platform fees. However, such investments are speculative and illiquid, lacking the liquidity of stock trading.

      The catch is that substantial capital may be necessary as many platforms cater exclusively to accredited investors, defined by the Securities and Exchange Commission as individuals with significant income or net worth. Options for non-accredited investors include platforms like Fundrise and RealtyMogul.

      3. Explore Rental Property Investment

      Consider investing in rental properties, a route Tiffany Alexy stumbled into at 21 when she purchased her first property. Opting for a four-bedroom condo in Raleigh, North Carolina, she lived in one room and rented out the others, covering expenses and generating additional income. This strategy, often termed “house hacking,” allows for occupying investment properties, either by renting out rooms or units in multi-unit buildings.

        For those considering buying and renting out entire properties, ensuring rental income surpasses expenses is crucial. Additionally, hiring a property manager may be necessary for those unwilling to handle maintenance issues personally.

        Discover top strategies for real estate investment. Delve into property flipping and explore room rental opportunities for a diversified portfolio.
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        4. Delve into Property Flipping

        Embrace the concept of house flipping by investing in undervalued properties, renovating them affordably, and selling them for profit. However, house flipping is more challenging and expensive than portrayed on television, demanding accurate cost estimations and potentially partnering with experienced contractors to mitigate risks.

          Living in the property during renovations can reduce financial risks, provided updates are primarily cosmetic.

          5. Explore Room Rental

          Dip your toes into real estate investment by renting out part of your home or utilizing platforms like Airbnb. Renting out a room can alleviate housing costs and may make mortgage payments more feasible for young individuals. Airbnb offers flexibility and pre-screened renters, providing a less permanent commitment for hesitant investors.

            Ultimately, the best real estate investment aligns with individual circumstances, considering factors like available time, capital, and willingness to handle property management responsibilities. For those lacking DIY skills, REITs or crowdfunding platforms offer indirect real estate investment options.