Real estate is an intriguing investment option that many people consider when planning for their financial futures. Approximately 97% of investors plan to increase the allocation of their capital to real estate within the next 18 months. However, buying and maintaining houses or becoming a landlord can be a turn off for some. Fortunately, there are ways for you to build residual income without dealing with tenants. Here are five ways to invest in real estate without buying actual properties.
Real Estate Exchange Traded Funds
These funds are a collection of bonds and stocks within a single fund. Exchange-traded funds have similarities to mutual and index funds such as low costs and broad diversification. You can invest in real estate investment trusts by buying shares as you would with a traditional stock.
You can also purchase shares in a private REIT. The risk-reward profile of private REITs are a little different. But one of the key advantages is that they generally aren’t susceptible to the same degrees of volatility as the stock market is.
Real Estate Notes
Real estate notes allow you to invest at lower costs because you are essentially buying real estate debt through a bank. You will need to perform your due diligence in order to determine if these notes are truly worth buying. Some are able to find great opportunities. If the homes cannot be sold or renovate, you may have trouble getting your money back.
Hard Money Loans
If you have plenty of cash to spare to invest in real estate, you can consider becoming a lender to other real estate investors with hard money loans. You provide the loan directly to the investor and the investor uses it to create a return on your investment. You benefit with investing in real estate this way by not having to participate in the buying and selling process and can free up your time for other income-producing activities.
Online Real Estate Investing
You can use an app for investing in real estate or an online website to purchase a residential or commercial property for sale with a company. There are many real estate investment apps available to choose from. This allows you to receive cash flow distributions without having to get your hands dirty. There is no requirement to be an accredited investor to be able to open an account with one of these online real estate companies.
If you are looking to invest in real estate, these above five ways can help you build residual income without extensive home maintenance costs and tenant relationships. You will need to carefully research which ones are best suited for your financial needs before making an investment. You’ll get all the benefits of owning real estate without all the hassles that sometimes come with it.