How To Start Investing In Real Estate Without Owning Real Estate

The following is a guest blog post:

Real estate investment is the oldest form of investment. The market has many opportunities. Owning and purchasing properties, then selling at a profit is a quick way to make money. It’s complicated and time-consuming to invest in real estate compared to stock and bond investment. That’s why it’s important to learn how to invest in real estate without owning property.

Ways to Invest in Real Estate without Owning Property

Investing in Rental Properties

This type of investment has gained popularity over the last decades. Investors purchase property and rent it to their potential tenants. The landlord will oversee the mortgage payments, property costs and taxes. The property will appreciate during the mortgage process. The disadvantage of this form of investment is that the tenants can damage your property which will lead to a negative flow of cash. When investing in rental properties, investors must select locations with low vacancy rates so that tenants will prefer to rent their property. Don’t forget that this form of investment comes with many responsibilities.

Real Estate Investment Groups

This is like mutual funds for leasing properties. For those investors that want to own rental proprieties without being landlords, this offers the best solution for them. Because of this, a company will construct apartment blocks and allow investors to purchase them through their corporation. Investors can own single or multiple units, but the company manages the investment in every unit. In return for management, the company will take some rent percentage. The benefits of these investment clubs depend on the company offering it. Investing in real estate without owning property is secure, but factions are at risk of similar charges compared to the mutual fund sector.

Investing in Pooled Funds

This involves investing in a pooled fund with professional managers that are investing their effort and expertise. The concept of a pooled fund is that mutual investors put together their resources into a single pool, which is then invested by the managers into numerous deals. The funds usually have a different set of criteria for investor accreditation status, risk/return profiles, investment strategies and minimum investment levels.

Trading in Real Estate

Trading in real estate involves buying or selling real property, which includes houses, apartment buildings, commercial space and mobile homes. It also includes commercial leasing and commercial property management. This form of investment allows investors to purchase real estate property temporarily and sells the property after some months to make profits. As a real estate professional, you need to hold a license to provide property management services with landlords (property owners) and tenants (potential tenants) in the leasing of real estate.

Real Estate Online Investing

This form of investment offers access to real estate investment through the internet. The real estate online investment opportunities are accessible only to accredited investors. Some companies allow direct access to real estate opportunity without any payment fees to middlemen like fund managers and brokers. Investors usually get access to the real estate market with a small amount of money and without any hassle of owning a property.

REITs

Real estate investment trusts are a form of investment asset that allows smaller investors to get into real estate. They are companies that use investors’ funds to buy income properties. This kind of investment permits investors to purchase proprieties and trade with them in the form of securities, which is like other mutual funds. REIT’s usually pay at least 90% of taxable income in the form of shares to investors. Depending on the structure, REIT’s can be traded on a private investment or public exchange.

4 thoughts on “How To Start Investing In Real Estate Without Owning Real Estate

  1. I’ve found the most practical for us young professionals to be investing in REIT’s. You can buy/sell via the stock market and they’re a great source of dividends, as well as some capital appreciation. They often trade at affordable prices meaning you can put even just a couple hundred dollars into them. Much easier for those without the time/money to invest in more capital intensive methods.

    • Hi Ben,

      I happen to agree with your assessment. I hold REITs in my IRA and think it’s a great way for anyone to get real estate exposure without having to deal with the expense of buying or selling actual real estate. Plus, you can get exposure to markets you might not otherwise be able to invest in a traditional manner like timberland, hospitals, ski resorts, jails, etc.

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