If you are considering real estate as an investment option, you might want to explore the possibility of investing without actually buying any property. If you are just getting started or you still haven’t found a great deal, you might want to consider investing in REIT.
What is REIT?
REIT, which stands for Real Estate Investment Trust, is a fund that purchases properties. There is a company in charge of the fund that also manages and maintains the property. The revenue is divided and distributed to shareholders who invested in the fund.
Several benefits come with investing in REIT. The most important one is probably that they provide you with a regular income without having to manage your investments.
REITs also give you the possibility of investing in multiple properties, as you get exposure to different kinds of real estate, like industrial or commercial buildings, office buildings or residential buildings. This is a way of diversifying your real estate portfolio, which is a very difficult thing to do if you actually own property.
This type of investment also allows high liquidity, as you can sell your shares at any time. In the same way, you can decide to invest in more. But be careful: there are a few things you should consider before investing in a share of REIT, because not every option means a good addition to your portfolio.
Some REITs don’t perform well because the location of the properties you invest in is poor. Also, some bad management practices can lead to revenue loss, so make sure you invest in properties that are well located and actively managed. A good way to see how a particular REIT is performing is by checking its history.
If you are looking to get exposure to the real estate market without having to own and manage a property, REITs are a great addition to your portfolio.
4 Real Estate Investment Platforms
The main key to invest in real estate is finding real good deals, and this is the tricky part: sometimes it can be a bit hard to get to know these deals for you to invest wisely. Fortunately, there are many options for you to explore:
This platform is one of the most popular ones and it offers one of the easiest ways to invest in real estate and get exposure to great deals. Fundrise offers a variety of investment strategies that will allow you to select your investor level according to your experience or capital. You can set up your account in five minutes online or downloading the app and take it from there.
Based on the premise that individual investors can keep the capital flowing, Groundfloor offers high-yield, short-term real estate debt investment to the general public. According to their website, this way they manage to generate 10%+ returns for their investors while securing your capital with real assets.
A rather new crowdfunding platform, DiversyFund is a company that actually owns the properties they are investing in. This way and unlike the other platforms, this eliminates transaction fees, which in turn translates to higher returns for the investors.
While other platforms focus on individual loans, Roofstock allows you to invest in single-family homes, so this way you don’t have manage the property directly. Instead, they have their own team to do that. Here you just need to select your search criteria, find a match and make a free offer. If your offer is selected, they’ll charge a marketplace fee of 0.5% of the contract price or $500, whichever is highest.
There are many other crowdfunding investment options, but these are probably the most popular ones and this is a great way to get your capital out there and get excellent returns.