Researchers expect new home sales in 2022 to reach 920,000, which is higher than what the market experienced last year. Despite recent fears that there will be a rise in house prices, residential real estate investing will remain profitable.
Despite it being a lucrative industry, most people can’t picture taking up landlord management duties. They find them too draining or time-consuming.
If you want to figure out how to invest in real estate without being a landlord, this article will help you chatter your way forward. Keep reading to learn various passive ways of investing in real estate.
Real Estate Investment Trusts
You can invest in residential real estate through trusts. They are investment companies that sell their shares to investors.
After accumulating a reasonable volume, they invest in highly profitable properties. Thus, you can own a share of the property proportional to your initial investment.
The company takes care of the management duties in exchange for a fraction of your returns. However, you’ll miss out on tax benefits in the real estate sector. Investors prefer REITs because you can sell your shares at any time.
Real Estate Syndications
Real estate syndications are more common among a group of friends. People with the same financial goal pool their resources together. Then, they invest in properties that are much higher than their financial capabilities.
In some cases, members will contribute the same amount. But sometimes, big investors may ask for funding from small investors. The syndications require more commitment of about 3-7 years.
Real Estate Mutual Fund
Mutual funds operate more or less like syndications. However, they are investment companies that sell shares to individuals.
Then, they’ll invest in multiple properties. High-risk investors prefer funds because of the diverse portfolio. However, it will cost you more capital. It’s like you pay for the diversification ad high returns.
Online Real Estate Investments
Like anything else these days, you can invest in real estate online. It’s advisable to conduct your due diligence before sharing any banking details.
You can find some great platforms like Fundrise. It operates like a fund in the cloud. You pool your resources with other people to buy real estate properties.
You can choose between single-family and multi-family properties. Understanding the difference between the two will help you make an informed decision.
Property Management Company
If you don’t fancy pooling your resources with others, you might want to outsource a property management company. They will handle all the landlord tasks and report to you.
Property managers charge a percentage of the rent for their services. You’ll maintain sole ownership of your properties. So you’ll be liable in case of any tax evasions and legal fraud cases.
Residential Real Estate Investing
Residential real estate investing is evolving. There are various avenues in which you can invest in real estate. Thus, you’ll have to take some time to deliberate on your choice.
Think about the level of control you want to have over your investments. This will guide you in picking the ideal investment for you.
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