While the idea of investing in real estate may appeal to you, you may be too busy to manage a property personally. Alternatively, you may feel as though you’re not up to the challenge of dealing with tenants. Regardless of your reasons, there are ways you can benefit from real estate investing without having to get your hands dirty.
Invest in a REIT
A REIT (real estate investment trust) is a fund that invests strictly in real estate. Each trust focuses on a specific type of real estate, so you can choose between a residential or a commercial REIT. Additionally, some trusts trade in equities and some trade in mortgages. As a shareholder, you’ll receive taxable dividends.
Invest in Exchange-Traded Funds
While an REIT invests directly in real estate, an ETF invests in REITs. The primary difference is that ETF is traded like any type of stock, meaning prices will rise and fall within the business day. Since an ETF invests in multiple REITs, the risk is lower, but that also means the potential gain is also reduced.
Invest in Real Estate Mutual Funds
As with any mutual funds, investments are chosen and overseen by an investment manager. There are several advantages to mutual funds. They let you diversify your investments, while also letting you choose between growth or income oriented funds. Again, there’s a lower risk with mutual funds, but that also means growth may be slower.
Invest in Real Estate Agencies
An agency sells homes for other people, so there’s no direct handling of the properties. This type of investing can help you get started and learn about the market, while profiting from the success of the company’s agents.
Invest in Real Estate Development
You might also choose to buy into new development projects. By investing in contracting companies, you can own a piece of the property and grow your money once the structure is completed and sold. While the risk can be high, the potential ROI can be equally substantial.
Each option listed here presents a different way to obtain a ROI through real estate investments. You may find one especially appealing or you may decide to try several different methods. A little research along with some trial and error can help you develop a system that works for you.