Investing in real estate still ranks among the surest ways to make your money grow. In fact, when you invest in real estate, returns are often outstripping those in conventional savings plans. Understandably, the real estate market also has its upswings and downturns.
Usually, these highs and lows are temporary. They do not remain for long. Real estate prices eventually bounce back and can provide excellent returns on your investments.
Nowadays, you need not actually buy a house to invest in real estate: there are several other ways to make money from this lucrative market. In fact, most financial advisors nowadays advice clients to include real estate investments in their portfolio.
Now, if you wish to know how to start investing in real estate without buying a house or a property, consider these excellent options. Let’s start discussing the different ways on how to invest in real estate without actually buying a house.
Different Ways to Invest in Real Estate Without Buying a House
Before rushing to invest in real estate without actually buying a house, it is best to consult your financial advisor.
Be specific about financial goals you wish to achieve through investments in real estate. Also, specify how much money you are willing to commit to real estate investing either in single or multiple options.
1) Thematic Mutual Funds
Thematic mutual funds are those investing in a particular sector or industry. You will find several thematic mutual funds that invest in equities, debts, bonds and other financial instruments primarily in the real estate sector.
Such mutual funds are a great way to invest in real estate without actually buying a house. A mutual fund consists of stocks, bonds and other instruments of various real estate firms.
Hence, your investment is at moderate risk only. Try investing in real estate mutual funds for great returns.
2) Real Estate ETFs
Exchange Traded Funds or ETFs are also a form of mutual funds. However, they differ in many ways. Unlike a mutual fund where you invest once and await prices to appreciate, ETFs are traded daily on stock exchanges like equities.
Hence, their prices are prone to highs and lows of stock markets. ETFs also invest in real estate firm equities, debt and other financial instruments.
Investing in such ETFs is also a good way to invest in the real estate market without buying a house. Real estate ETFs also offers fairly high returns, depending upon the country where you reside and demand properties at any given time.
Further, ETFs have high liquidity. Meaning, you can buy or sell them whenever you wish. There are no minimum lock-in periods usually.
Real Estate Investment Trusts or REITs is yet another option you may consider to invest in real estate without actually buying a house. In simple words, a REIT is a financing company.
They take your money and to invest in construction projects that are known to make profits. REITs can be described as a combination of mutual funds and crowdsourcing.
Usually, REITs provide excellent high returns if you stay invested for moderate to long term. There are various REIT investments that offer solutions that suit your needs.
Since REITs only invest in real estate ventures sure to make profits, investing in REITs is fairly safe. Acquaint yourself with these trusts and plan your way to invest in REIT.
Find the best investment options for you through REITs. They can provide some of the best returns.
4) Real Estate Company Stocks
There would be several real estate investing companies in your country that are at the forefront of new, innovative commercial and housing projects.
They would have a solid brand reputation while their investment properties sell fast. Most of their projects would be successful. Some such real estate companies are also listed on various stock exchanges.
If you are well versed with the stock market or have a financial advisor, consider investing in REIT stocks.
These stocks are a good option to invest in real estate without actually buying a house. You can buy real estate company stocks through Initial Public Offerings (IPOs) or in the secondary market too.
5) Buy Mortgage Notes
Mortgage notes are sold by banks and credit unions. Mortgage notes are sold when a bank or credit union is unsure about the mortgage is taken by a creditor.
If creditors need money fast, they also give mortgage notes to the lender. These are at interest rates much lower than what the borrower would otherwise pay.
Banks and credit unions are happy to sell you mortgage notes. Since they do not advertise mortgage notes for sale, you will have to ask them specifically for some.
Or you can buy them through reputed online companies. This is because you are paying the money. And the money paid at higher interest is credited to your account.
You also reserve the option of foreclosing on a real estate, if you hold a mortgage note and find delays in payment. There are several online resources from where you can buy a mortgage note.
6) Invest Through Crowdfunding
There are many crowdfunded real estate projects and several companies also allow you to crowdfund a project.
They normally aggregate money from real estate investors like you to finance the projects. Their projects are curated. Hence, you are sure they will put your money into profit making ventures only.
Further, you have the option of selecting which properties or real estate you want to fund. It is also possible to invest in more than one real estate project using crowdfunding platforms.
Your investment results in regular cash flow from the crowdfunding company. The real estate developer pays this platform the money it has received plus interest.
This is divided among all stakeholders depending upon how much money you have put in. This is a fairly safe way to invest in real estate without actually buying a house.
These above methods to invest in real estate without actually buying a house are time tested and proven to fetch high returns. However, you may need to stay invested for moderate to long term to make some very significant gains.
Though real estate markets worldwide are also volatile, there are no guarantees about how much money you can make with investments. Overall though, you will make some profits that justify the effort and investment period.