Many people think it is too complicated or would require too much time or money to get started. And maybe that was true 20 years ago.
But today, there are so many different ways to invest in real estate (even from the comfort of your couch) that there is room for almost everyone to be a real estate investor somehow.
When most people think of investing in real estate, they think of the mom-and-pop investor who owns several rental houses and spends their evenings and weekends fixing them up and dealing with tenant issues.
While this is certainly a viable and profitable strategy, there are many other avenues to invest in real estate.
A Real Estate Investment Trust (or REIT) is a company that owns and operates real estate. You can buy shares in a REIT and own a small part of the company that owns the real estate. It can be a great way to learn how to invest in real estate with little money. You can buy a share of a REIT for $10-100, compared to a down-payment of $10,000 or more for a rental property.
Your money is pooled with other investors’ money and is used to purchase real estate properties. The REIT manages the property, and you get the benefits of the cash flow and appreciation generated by the REIT’s physical property.
The JOBS Act of 2012 opened the door for many small businesses (including real estate companies) to raise money through public crowdfunding. Private equity real estate investing used to belong solely to the super-rich and well-connected. But crowdfunding has allowed average investors to participate in real estate in a way that was impossible before.
I’ve done many different things in real estate investing, but one of my favorites is being a hard money lender. If you have the cash, you can “become the bank” and lend money to house flippers or landlords who need to do serious work to a property before they can get a typical bank loan.