The Smartest Way to Invest in Real Estate Without Buying Property
In today’s world, the options to invest your money are endless. You can’t watch T.V. (YouTube, Hulu, Apple; take your pick) these days without Hollywood stars and professional athletes promoting the latest and greatest crypto exchange. But just because Tom Brady is paid to tell you to buy crypto doesn’t mean you should--sorry SBF :(. (Too soon?)
Whether you’re a crypto believer or not, one thing is for sure -- real estate has shown itself to be a steady, quality asset through the ups and downs of the market over the years. Real estate is a smart investment, hands down.
It's easy to get the idea if you're a new real estate investor that you have to take out three extra mortgages on rental properties to successfully invest. Fortunately, this is false. Solid, innovative options for real estate investments without buying property are on the rise.
Real Estate Investment Trusts (REITs) and real estate crowdfunds are key examples. Both of these investment options can creatively deliver on the passive income potential and stable value of owning property without the headaches of property management or a serious upfront capital commitment. Out of the two, REITs have the edge doing both of these things.
Real estate crowdfunds give the average investor access to the benefits of high-quality real estate assets. We are talking about assets that are normally only available to accredited investors through private equity firms.
Crowdfunds do this by pooling small individual amounts of investors’ money to purchase and manage large real estate assets. Investors then are entitled to a portion of returns based on the asset’s performance.
The investors benefit without having to finance and manage property. They also only need a fraction of the funds required to invest in these assets otherwise.
Crowdfunds bring the steady asset value and wealth building potential of large real estate assets to the masses. They aren’t without their downsides, though. A big one being their lack of liquidity. REITs on the other hand are much better in this department.
A REIT is a corporation that invests in real estate on behalf of its shareholders and passes on a share of profits to them. REITs are similar to Crowdfunds in that they pool investors’ money to purchase and manage real estate assets. However, they are structured slightly differently.
Crowdfunds can make it difficult for investors to get their asset’s worth in cash. Often, crowdfunding requires investors to commit to a lock-in period where they can’t pull their money out, which means that they are a less liquid real estate asset.
Shares of REITs can be bought and sold just like your standard stocks. REITs are also legally obligated to give 90% of their profits to their shareholders in yearly dividends. Ease of buying and selling REITs and these dividends mean steady cash flow from real estate assets to you, the investor.
Cash flow from solid real estate assets without the hassle of financing, owning, and managing rental properties is the genius of REITs. One of the most attractive features of buying property as an investor is the potential for regular rental income. This income only comes at the cost of blood, sweat, tears, and time poured into owning a property and managing renters.
As we said in a recent blog, all you need to access the regular income available from REITs is five minutes and a smartphone. You purchase shares of a REIT. The REIT uses its funds from share sales to buy, own, and operate properties. Then you sit back and wait for a quarterly check with a slice of their profits. Now that's what you call passive income. You don't have to worry about maintenance headaches, renter conflict, or financing snafus to secure some of that sweet, sweet profit.
Reiturn is Birgo’s own REIT. We launched this Regulation A+ real estate investment trust to offer everyday investors an opportunity to diversify their portfolio with high quality multifamily real estate assets. Reiturn invests in multiple stable apartment complexes in the Heartland of America, including markets in Pittsburgh, PA; Buffalo, NY and Cincinnati, OH.
Not only are we giving more investors access to a high-quality asset class with stable value and regular cash flow, but Reiturn strives to provide superior service to underserved tenant populations while maintaining affordability. While there are plenty of REITs out there, we recommend starting with Reiturn. Sure we are biased, but it's hard to match our impact-minded mission and investment opportunity.
Real estate investments are not just for the Wall Street elite or those with rental property empires. REITs offer a smart, innovative way for your everyday investor to reap the benefits of a stable, quality asset with regular cash flow. They do all this without requiring you to be a billionaire or take on a full time job of rental property management. If you’re interested in investing in REITs today, check us out at Reiturn.com.