It’s no secret that real estate assets can be very valuable additions to any investment portfolio. Over the long term, real estate tends to appreciate, and it makes a very stable investment. Unfortunately, many people believe that they do not have the funds to begin investing in real estate and that they will not have the capital to do so until much later in life. In most cases, this is actually untrue, but many novice investors are not aware of their options for investing in real estate to improve their portfolios right away and begin gaining passive income long before retirement.
Invest in an REIT
An REIT (real estate investment trust) is a corporation or trust of investors who have pooled their resources to invest in one or more large properties. These properties would be too expensive for most individuals to purchase, but when a group goes in together, all of the members share the profits for a lucrative investment for everyone.
When you invest this way, you will actually invest in the REIT by purchasing shares, which represent equity in the property or properties that the REIT owns. This is potentially the fastest, easiest, and most hands-free means to invest in real estate to improve your investment portfolio, as you can buy or sell shares at any time.
When you invest in an REIT, you have no control over the properties your investment money goes to. Essentially, your success is contingent on the expertise of the people making the purchasing decisions for investors’ capital. Fortunately, though, the whole process is very transparent, and you should have foreknowledge of the properties your REIT is investing in before you commit to an investment.
Invest in Crowdfunded Real Estate
If you are uncomfortable with relinquishing control over your investment capital, you may want to consider joining a real estate crowdfunding site. When you join one of these sites, if you are an accredited investor, you can pledge as little or as much funding to back local, national, or even international developments of your choice.
The advantage of real estate crowdfunding is that you have full control over how much money you place in any one development. You may also spread your investment capital across a number of developments to further stabilize your real estate portfolio. However, this style of investing requires you to rely on your knowledge of the market, the developer(s) you’re backing, and everything else that will affect your potential profits from owning equity in your investment property or properties.
Essentially, investing in crowdfunded real estate involves more homework than investing in a quality REIT or even investing with a real estate investment club. If you are not a seasoned real estate investor, you may want more guidance and financial advice than you can get on your own. However, with the right applications, either of these methods can greatly improve your investment portfolio with real estate investments.