How I Learned to Invest in Real Estate

By: Melissa Etezadi, HappyNest PR and Content Manager

Like many novice investors, I was told at a young age the only way to save money for retirement was to invest in your 401(k), open an IRA, and of course, invest in the stock market. Growing up, I remember watching my dad emotionally react to the twists and turns of the Dow. His mood would fluctuate as the market would swing from high to low. We knew as kids if the numbers on the tv screen were red, it probably wasn’t a good day to ask for spending money.

 

It wasn’t until I graduated college with over $100,000 in student loan debt, and a mediocre first paying job, that I realized I needed to find new ways to diversify my portfolio and grow my nest egg. The real question, though, how? I decided to take to the internet – it’s here where I learned about investing in real estate.

 

So, what makes real estate worth investing in? Unlike traditional investments such as stocks and bonds, real estate is not tied to the stock market’s volatility and fluctuations. Real estate is a tangible asset, so it relies on the economics of a local market instead. There have been many situations where the stock market has been in a downturn, while real estate investments’ value was on the rise.

 

I learned that real estate is a less liquid asset, so it takes longer to convert to cash. This is one of the main reasons many financial experts stress the need for a balanced portfolio of real estate, stocks, and bonds. In the finance world, it’s called diversification.

 

My investment journey was slow – I did not invest in some fantastic stock that turned into millions overnight or purchase a $5M CVS Pharmacy or apartment building. I researched the subject and visited popular sites such as www.reit.comwww.investopedia.comwww.daveramsey.com, and www.myhappynest.com to help learn the terminology.

 

After exploring all my options, I decided to buy shares of REITs as they seemed to be the best way to gain exposure to real estate investing without having property management duties or fronting a large sum of money. I learned that REITS are a long-term investment and traditionally pay 3, 4, or even 5% dividends, helping me double my investment over time. My goal is to continue growing my wealth by maintaining a healthy portfolio of diversified investments so my children won’t have to see me go through the stress my father did.

 

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4 Ways To Invest In Real Estate Without Buying Properties

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 stocks that are issued by real estate investment trusts and other investment services that purchase a wide variety of properties.

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.
 

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