Thanks to advancements in technology and loosened SEC restrictions, real estate investing is no longer reserved for the independently wealthy. In fact, you can now invest in real estate with as little as $100.
Why Invest in Real Estate?
Real estate is among the most stable investment vehicles. It’s ability to weather economic downturns is unparalleled. Even during the COVID-19 pandemic, investors in quick-service restaurants came out ahead. And that’s just one real asset that you can invest in.
People will always need a place to live, making multifamily and apartment complexes valuable investments. And as the world goes remote and the pandemic wanes, people are traveling more than ever. Now is a great time to invest in hospitality real estate, like hotels, resorts, and short-term vacation rentals.
Real estate, in general, has seen a stable return of around 5%, historically. While this return isn’t as high as some stocks, it is stable and safer than most. Plus, if you’re in the market to buy, you can live in your investment.
Let’s get into 3 ways that anyone can invest in real estate.
1. Buy Your Own Property
Believe it or not, you can buy a house, duplex, triplex, or fourplex for as little as 3% down using an FHA loan. One of the best aspects of real estate investing is leverage. Unlike stocks, to invest in a property, you don’t need the whole amount upfront.
Many mortgage lenders require you to live in the property for a minimum of a year. After that, you’re free to rent it long-term or short-term.
The pros of buying an investment property are that you have a place to live and your tenant covers the mortgage, insurance, taxes, and helps fund repairs. You also get tax advantages, plus you build equity and appreciation over time.
The cons to this strategy are that you have to manage a physical property. That means when the water heater breaks, you’re responsible for finding a plumber and getting it fixed. That can be a lot of money out of pocket. You also may have to deal with bad tenants.
2. Invest in Real Estate Crowdfunding
A much more passive way to build wealth through real estate investing is to use a real estate crowdfunding platform.
In the past, investing in real estate this way was restricted by the SEC to real estate companies and high net-worth individuals.
Now, you can use platforms like Yieldstreet, Fundrise, and RealtyMogul to find a company you think will give you a great return on your investment. Fundrise allows you to invest with as little as $10! Yieldstreet has a minimum of $500 and RealtyMogul requires an investment of $5,000 to get started.
In a way, investing in REITs, or real estate investment trusts, is like crowdfunding, but often with less risk. That’s because REITs, which are traded like stocks, have to meet certain requirements.
You can invest in REITs, which come in the form of stocks and ETFs, using your personal stock portfolio or your retirement portfolio. Many REITs are dedicated to particular asset classes, such as hospitality, retail, office, multifamily, or industrial. Often, REITs pay monthly or quarterly dividends – that’s truly passive income.
Always do your due diligence before committing funds to REITs, or any investment for that matter.
Diversify Your Portfolio Today Real estate is a great way to diversify your portfolio, and it’s never going to go away. People will always need a place to work, live, and play. And investing is easier than ever. Use this as leverage to make smarter choices for your future.