Investing in real estate is a lucrative way to diversify your investment portfolio. However, it requires a significant amount of time, money, and effort to manage a property. As such, many investors nowadays prefer to invest in real estate passively, which means they can earn profits without actively managing the property. In this article, we’ll guide you on how to invest in real estate as a passive investor.
1. Invest in Real Estate Crowdfunding Platforms
Real estate crowdfunding has become popular in recent years, and it’s an excellent option for passive investors who want to earn profits from real estate without actively managing it. There are numerous crowdfunding platforms like Fundrise, Groundfloor, and RealtyMogul, which allow investors to pool their money together to invest in large commercial properties, residential properties, and even individual projects. Investors can choose the type of project they want to invest in and how much they want to contribute and receive profits proportional to their investment.
2. Real Estate Investment Trusts (REITs)
A REIT is a company that owns and manages income-generating real estate. Investors can buy shares of a REIT like they’d buy shares in a company, and they’ll receive regular dividends from the profits the REIT earns. REITs invest in various types of properties, from commercial to residential, and are publicly traded, making them easy to buy and sell. REITs can also be a great choice for passive investors who would like to invest in real estate without the hassle of managing it themselves.
3. Real Estate Syndication
Real estate syndication can be an attractive way to invest in large commercial properties. A syndication is a partnership between investors who pool their money together to purchase a property. One person takes the lead in managing the property, while the others invest and collect profits. In this way, investors can be able to invest in significant commercial real estate projects that would otherwise have been challenging to afford or manage alone.
4. Equity Real Estate Crowdfunding
Equity real estate crowdfunding is a method of investing that combines aspects of both real estate crowdfunding and real estate syndication. The difference with other crowdfunding options is that it allows investors to own equity in the property they’re investing in. The investment process is similar to a traditional crowdfunding campaign, where investors pool their money together to fund a project. However, instead of just receiving a percentage of the profits, investors receive equity in the property, which allows them to earn a return on the property’s appreciation.
In summary, investing in real estate passively is an excellent way to diversify your investment portfolio while avoiding the responsibilities of active property management. Research each passive investment option further to determine which works best for you and your financial goals. The good news is that there are various ways to invest in real estate passively, so there is always a suitable option for you. With proper investment strategies, you can achieve your financial goals through passive real estate investing.