5 ways to invest in real estate without buying property

Real Estate | 28 Apr |

Real estate investment is one of the finest investment strategies and helps you to create a diversified portfolio along with stocks and bonds investment. But, there is a major misconception associated with real estate investing. Majority of the people have an idea that they need to have their own property for generating real estate cash flow. No doubt, if you own properties you can easily have a steady monthly income by renting it and or make huge profits by selling it but, there are other options available as well.

If you are not a real estate property owner, check out these 5 amazing choices to invest in real estate without buying a property.

1. Real Estate Crowdfunding Investment

Crowdfunding websites allow you to invest in third-party properties without owning it. You have to put your amount of investment in the websites and based on your deposited amount it will suggest you the investment choice. Crowdestate is one of the leading European crowdfunding platforms while other popular choices include Fundrise, Realty Mogul, Groundbreaker, Crowdstreet, RealCrowd, etc. For equity crowdfunding, you get your profits either in the form of monthly rent or share from the sold property. For debt crowdfunding, you get profits based on interest rates from mortgage payments.

2. REITs Investment

Real Estate Investment Trust or REIT is referred to the participating companies that own, operates and real-estates that can generate cash flow. As an investor, you can make money through RITs just like investing in company stocks and bonds. Whenever you deposit your invested amount in RITs, you eventually hold a part of the invested property like- commercial spaces, office buildings, apartments, retail centers, data centers, etc, RITs mainly deals with the commercial properties and lets you achieve profit from property rental or sold value through equity REIT. Mortgage REITs however, deals with residential or commercial mortgages and generates cash flow through mortgage loan interests. The dividends are higher here and have the chances of increasing with time.

3. Real Estate Mutual Fund Investment

Real Estate Mutual Funds are ideal for the general people who have lower investment amount. It gives you an opportunity to invest in multiple properties having low investment requirement instead of directly investing in any real estate. The returns are calculated based on interest rates, the market value of the properties and supply & demand of those properties. Real estate mutual fund mainly deals with commercial, residential and agricultural properties. It provides both direct and indirect investment opportunities to cater to the requirement of all kinds of investors.

4. Real Estate ETF Investment

ETF or Exchange Traded Fund is similar or real estate mutual funds. It is highly beneficial for the investors looking for lower investment stocks or bonds and gaining returns from them. You are often required to pay a high tax rate for the dividends from mutual funds but if you want to go with the lower tax rate, ETF is the ideal choice with quality returns. ETF uses two kinds of dividends- Qualified dividends which involve investors owning share or stocks for more than 60 days. The tax rates here are based on capital gains. Non-qualified dividends, on the other hand, have no such criteria and have tax rates based on general income.

5. Real Estate Notes Investment

Real estate notes refer to the promissory document or contract where the payee lends the amount to the borrower with applied interest rates from time to time till the payback as well as penalties for late payment. If you have money to invest and you don’t want to be in the hassle of investing in any real estate properties, you can invest in promissory real estate notes for higher returns. It will give you a steady monthly payment without dealing with tenants or property maintenance. You can buy the notes directly from the bank and associate it with service providers to handle the payments and borrower communication on your behalf.

Final Words

So, if you are interested in real estate investment without being a property owner, don’t worry. You can generate profitable cash flow if the above 5 strategies are applied correctly.

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