Most people assume that in order to invest in real estate, you need a hefty down payment and a whole heap of cash with which to buy the property.
The truth is, investing in real estate doesn’t need to cost you an arm and a leg. In fact, it doesn’t even need any of your money! If you’re looking for a way to get involved with the real estate market without having buckets of cash lying around, there are many ways for you to invest in real estate without actually owning any property yourself. There’s no reason not to give investment opportunities in the housing market a chance!
Real estate investment trusts (REITs) are a great way for you to invest in the real estate market without needing to actually own any property. REITs are real estate companies that buy, finance, and manage properties. They’re like mutual funds because they’re publicly traded on the stock market, but they’re also like regular real estate companies because they buy and sell properties just like any other company. REITs are not unlike real estate investment companies of any kind.
The best part about REITs is that you receive monthly or quarterly payments from the company in exchange for renting out your share of the company’s holdings. This way, you receive a portion of the profits from the properties you’re renting to others, even if you’re not actually buying any property.
REITs are great for investors who want to build up savings and a nest egg that they can use later on in life. If you have more than one property you intend to rent out, there’s no reason why all of your money should go towards one large investment of several properties. You should split your money into tiny chunks so that if one property is affected by the housing market downturn, your other properties will still earn profits.
Although REITs offer a great way to invest in real estate, it is not without its risks. The most important thing you can do when investing in REITs is to do your research so that you’re aware of any negative statistics about the company. You may have heard someone use the term “too big to fail”. REITs are too big, therefore they are just as likely to go under as any other large company.
You’d be surprised by how many people turn down investment opportunities that involve real estate because they’re scared about the risk involved. But the truth is, real estate is just like any other asset. All assets have risks associated with them. If you play it safe, you’re only going to get yourself into trouble if market conditions turn sour.
Just because some of these tips involve buying shares in a real estate company and owning an apartment building, doesn’t mean that the techniques you learn in this article can’t be used for other investments too.
It’s important to know which financial form to buy shares of in order to make sure they’re priced at a level that will give you a good return.