Did you know nine in 10 Americans don’t pursue real estate investments during economic downturns? While there are often opportunities where the majority only see risks, it’s never a good idea to sink your hard-earned money into real estate unless your heart’s into it.
You can invest in property to build a diversified investment strategy that includes stocks, bonds, ETFs, index funds, cryptocurrency, annuities, and more. While there are various investment opportunities, buying investment properties can give you the most oomph for your buck.
According to one source, the average home price in the country in the second quarter of last year was $495,100. That might be too much of a pill to swallow if you’re struggling with debt. But there’s a reason many people buy rental properties, find tenants, and collect passive monthly income. If that option isn’t realistic right now, there are multiple ways to invest in real estate.
Consider these three ways to invest in properties and take your investment strategy to the next level. You’ll see that there are different ways to invest in real estate.
- Buy a Rental Property…Or Purchase a Stake
Purchasing an investment property is one option. But what can you do if you want to invest in real estate but lack the financial capacity to buy something outright? One option is to invest in real estate funds. Invest.net, a turnkey real estate investment platform, says investing in a real estate fund can help people pursue turnkey real estate investments cost-effectively.
For instance, its Invest.net SFR Fund I, a single-family real estate fund, requires a minimum investment of $20,000, which is much less than the down payment for a home these days. The goal is to achieve above-average capitalization rates in specific regions in the Midwest U.S.
- House Flipping
According to one source, 308,922 homes were flipped in the U.S. last year. The source adds that homes flipped in 2023 sold for a median price of $306,000, producing a gross profit of $66,000 above the median original purchase price of $240,000 paid by the investors.
The goal of house flipping is clear. You purchase a home at an opportunistic price, fix it up so it’s sale-ready, and then sell it for a profit. But if you lack DIY home renovation skills or don’t know skilled people who can do the work relatively inexpensively, home flipping might be difficult.
That said, house flipping is one option to get into real estate investing, and it can be worthwhile if you know what you’re doing.
- Real Estate Investment Trusts
Another option is a strategy that includes buying real estate investment trusts (REITs). A REIT is a company that owns income-producing properties in various property segments, such as hotels, warehouses, apartments, shopping centers, and hospitals.
The good news is that investing in REITs is easy. REITs are available on stock exchanges. So, research various REITs to find options you like, and buy them on stock exchanges.
All you have to do is search stock exchanges to find them. In addition to the potential for the units you buy to increase in value, you will also earn dividends for each REIT unit you own. Payouts are done monthly, quarterly, or annually.
Another way to invest in REITs is through index funds or mutual funds. Going this route can be especially attractive if you’d rather own a collection of REITs, rather than buy individual REIT units. Buying REIT-focused index funds or mutual funds will offer greater diversification and help if there’s an economic downturn since these investment vehicles combine multiple REITs.
These are three ways you can invest in real estate. Your best bet is to explore the various options and pursue the ones that make the most sense based on your financial wherewithal and interests.
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