3 ways to Invest in Real Estate WITHOUT Buying Real Estate
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Real-Estate Investment Trusts (REITS)
REITs are companies that own real-estate and sell their stock. This stock and can be publicly traded similar to stocks you may or already own. Although they are traded like stocks, they represent real estate assets that may not move in lock-step with the stock market. This makes REITS a liquid asset which can be a good option for investors who want diversification without locking up large sums of their money. Another attractive aspect is the ability to invest in REITs that hold assets in specific sectors. For example, there are REITs that hold office building, REITs that hold data centers, REITs that hold senior care facilities and so on. Most individual investors are a long way from being able to buy a whole data center so this can be an opportunity to invest a smaller piece into that sector.
Most REITs lease out their underlying assets and give a portion of that rent in the form of dividends to the shareholders. For more information about REITs you can look at our guide here.
There are a few publicly traded companies whose performance is dependent on the real-estate market. Investing in these stocks could be a way to diversify your portfolio even further although there is no guarantee the stocks performance will mimic that of the stock market. Some examples are Zillow Group (ZG) and Redfin (RDFN). These stocks both currently trade under 100$/share and can be a way to diversify your investment portfolio.
Important Note: Unlike REITs, these stocks do not hold underlying real-estate assets.
Crowdfunding Real Estate platforms match “sponsors” who have a project that needs funding to individual investors who would like to help fund a smaller portion of that project. These projects could be anything from building condos downtown to refurbishing and selling office buildings. The investor’s contributions are exchanged for a share in the profits of the project via distributions or a lump sum. This type of investment is highly non-liquid as it may takes years for the project to complete. Some of the top crowdfunding sites are included below and for more info check out our guide here.
Important Note: Crowdfunded Real-Estate deals are a risky investment and are defined as an alternative investment. Also, some platforms may only accept accredited investors (those with 1million+ or 200k+ per year).