How to Invest in Real Estate WITHOUT Buying Property: 10 Ways

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How to Invest in Real Estate WITHOUT Buying Property: 10 Ways

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THE STREET.COM: If buying property is too expensive of an investment for you, it’s not only way you can add real estate to your investment portfolio. There are plenty of ways to have a stake in the real-estate game.

Here are 10 ways you can invest in real estate without actually having to buy any property.

1. Invest in Real Estate Investment Trusts (REITs)

A REIT, or real estate investment trust, is a company that either owns or finances real estate that produces income. REITs invest the majority of their money into real estate, and it’s how they make the majority of their income.
There are REITs that focus on both residential and commercial property. Most REITs are equity REITs, but some trade in mortgages instead of actual properties. Perhaps most important for you, the investor, is that at least 90% of the taxable income it pays is via dividends to the shareholders. So researching thriving REITs and purchasing shares in them has potential as a profitable investment. 

2. Invest in Real Estate Mutual Funds

Real estate mutual funds differ somewhat from REITs. Whereas a REIT is an actual company, mutual funds are simply investments pooled together and overseen by an investment manager.

A mutual fund allows investors to have diversified their portfolio both in terms of having a mutual fund and having real estate. Like with other sorts of mutual funds, you can choose ones that are growth-oriented or income-oriented. As a diversified asset, they are designed with the intention of mitigating risk, but they are still vulnerable to the risks inherent in real estate. If a real estate-related risk negatively affects one of the investments in the fund, it’s likely to impact a lot of others too.

3. Invest in Real Estate ETFs

In addition to REITs, there are REIT ETFs, or exchange-traded funds. REITs invest in real estate; REIT ETFs invest in REITs.

For example, the Vanguard Real Estate ETF (VNQ) includes some of the most notable REITs within its fund, like Simon Property Group (SPG) and Prologis (PLD) . It could be less risky than investing directly in a REIT, and certainly less risky than actually buying property, but you’ll also be getting less of a return back. Still, if risk is one of your biggest concerns when mulling a real estate investment, a REIT ETF is something that should be considered.

4. Wholesaling Houses

Wholesaling real estate is a little similar to flipping homes, but you don’t own the home and you don’t have to front any maintenance cost.

Wholesaling a house means contracting someone who is looking to sell their house, and quickly taking that contract and selling it to a prospective buyer for a profit, which the wholesaler keeps. No fixing up involved.

If you can actually successfully do this, great! There’s much less risk as you’re not putting your own money into the operation. The difficult part of doing this is actually finding a house that has been undervalued on the market that you can manage to sell for a profit.

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5. Use an Online Real Estate Investment Platform

Much like with other sorts of stocks, there are online platforms that help you make real estate investments as well. Often, these investments you make are part of crowd funding, a way for others to be able to buy property without requiring venture capital. Popular online real estate investment platforms include Fundrise and RealtyShares.

This option tends to be more for those with money to spare, considering the costs necessary to purchase large property.

6. Real Estate Partnerships

Some real estate investments require an exorbitant amount of money. Not everyone can foot that. If you’re not the only one involved in the investment, however, it could become more manageable.

Partnerships are a common way to invest in real estate, with each person taking over different responsibilities. Often, this can be used as a way to purchase property at a lower price. You can set the terms – such as simply paying the mortgage, or perhaps handling the down payment for the property. Depending on the terms of your partnership, you may be investing in real estate without doing too much hands-on work of owning property.

7. Invest in Real Estate Service Companies

There are plenty of companies that work primarily in the world of real estate that you can invest in.

Look beyond REITs for your real estate companies. For example, RE/MAX is a company that sells homes via real estate agents. Companies involved in real estate that don’t involve actually buying property can be a way to not only diversify your portfolio, but get a good sense of the current real estate market.

8. Invest in Home Construction Companies

Another real estate-related investment that could be worth your time are companies that are involved in the construction of homes.

There are plenty of home building companies whose stock trades on the NYSE every day, such as Lennar (LEN) and D.R. Horton (DHI) . It’s an intriguing investment option for those who believe that the construction of homes is something that will continue to increase, because if that’s true, business should continue to boom.

9. Become a Real Estate Appraiser

Have you considered employment within the real estate industry? It can not only be an investment of sorts, but prepare you for how the market is doing and when the time is right to make good investments.

One job within the industry to consider is a real estate appraiser. An appraiser can specialize in either residential or commercial real estate, and determine the value of a property. They take specifics about both the property and its nearby surroundings into account to do this. According to the U.S. Bureau of Labor Statistics (BLS), the median salary for a real estate appraiser or assessor in May of 2017 was $54,010. Those with the highest salaries, however, could make over $101,000 a year.

10. Start a Brokerage or Become a Real Estate Agent

You could also get into the game of selling real estate. Real estate agentsrequire some education and training before they can actually get out there and flip houses, but successful real estate agents can take home nice commissions on the properties they sell.

Agents generally work for real estate brokers, and if you’d rather be at the top than out there selling the homes, perhaps consider opening a brokerage and hiring agents. Brokerages get a large part of the commission that the agents make, so having successful agents can bring in a lot of money.

But starting a brokerage isn’t simple, and it’s incredibly expensive. You need extensive training and licenses to open and maintain one. If you’re a successful agent looking for the next step in their real estate career, it could be a great idea. But if you don’t have that level of success, knowledge or funding, you may want to start with becoming an agent.

By Steve Fiorillo for The Street.com | Click Here For More