For many, the benefits of investing in real estate are offset by the responsibilities of becoming a landlord. Real estate investments by owning rental properties can create wealth and cash flow, but they aren’t the only way to reap the rewards of real estate investing.
How come passive real estate isn’t more popular?
- Lack of knowledge of the available options
- Not knowing how to do due diligence
You can find expert real estate agents and investors by checking out our tips on how to choose a realtor.
This guide will help you with the first problem. Here’s how to invest in real estate without being a landlord.
Investors can purchase and sell REIT shares so that dividends and long-term value can be earned on the properties. Equity is traded, not debt. Many of these companies have millions or billions in valuable properties that generate cash flow. Investors don’t own properties directly; they own shares in the companies that own & operate them.
2. Real Estate Syndications
The goal of syndication is to pool investors’ resources to buy or manage big projects they could not afford alone. Sponsors may present deals to investors that involve buying 350-unit apartment buildings and raising $15 million.
Sponsors put together deals and run them for investors. When you invest, expect to go on the ride the entire time. Do your due diligence before investing. You only have to check your bank account for deposits and file taxes every year after making the investment.
3. Real Estate Funds
In most cases, syndicates are considered single properties. However, a real estate fund invests in multiple properties under one umbrella. Fund operators will purchase multiple deals with the capital you invest. You benefit from diversified investments across multiple locations and properties with a single investment.
4. Note Investing
An example would be a personal check-in. A note would contain your name. Promissory notes accompany property sales and define the loan terms. It is the safest method of investing in real estate, even though it is not secured by collateral. Investing in secured debt allows the investor to become the lender. Notes are bought at a discount by investors and sold to lenders.
5. Hard Money Loans
Hard money loans are short-term loans also known as bridge loans. Investors need these loans to get started with a project. It is mostly used by house flippers to renovate or develop properties for a profit. Many private lenders offer these loans.
As private lenders, these loans offer flexible terms in addition to convenience. As with collateral, the lender decides whether to give you leeway.
Investing is all about giving money out to borrowers on your terms as a lender. Based on your needs, you can request a share or a fixed percentage.
Investing in real estate goes beyond buying and selling. The industry offers tons of opportunities depending on your goals and commitment level.
Trying to sell your property quickly? Check out our experts’ guide on selling your house in 24 hours.
- Linda’s right hand, Kenneth has been working with Linda for years, helping in planning, managing, and editing projects.