How to invest in real estate the non-traditional way

It is no secret that buying real property is one of the oldest methods to invest in real-estate. What if you do not want to sell your kidney in order to participate in the current market’s bidding war?

You may not want to own, you might not want to be a landlord or you may just prefer to find a different way to invest.

Today, we will look at alternative methods to real estate investing. We’ll cover everything, from REITs & crowdfunding to live and flip.

What is the traditional way to invest in real estate?

Investors can make a lot of money by investing in real estate. Many people purchase property with the intention of renting it out, renovating and then reselling the property at a later date for a profit.

A traditional method of investing in real estate is to purchase a piece of land.

• Develop your land to generate income (property or business).
• Keep it in the hope that its value will increase over time

Real estate investment has many advantages. It’s tangible which is reassuring to many, especially in these times when digital assets are at the forefront of people’s lives.

You are less likely to lose money in times of economic crisis if you invest in this investment because its value is generally stable.

HOW MUCH MONEY DO YOU NEED TO START TO INVEST IN REAL ESTATE — OR HOW LITTLE?

Some people think that they need a lot of money in order to invest in real estate. There are many ways to invest, so this doesn’t have to be true.

Depending on the size of your account, you could end up paying less than $20, regardless of your financial situation.

A FEW TYPES OF NON-TRADITIONAL INVESTING

REITs

Real estate investment trusts (REITs) are a collection of real estate assets that have been bundled into one fund. The majority of REITs are traded like stocks at the stock exchange, and allow individual investors to receive dividends.

REITs specialize in a specific real estate sector. Diversified and specialty REITs can hold a variety of different properties. A REIT consisting of retail and office property is an example.

Dollar-cost-averaging is a good way to accumulate a large amount of passive income by setting up an automatic deposit or buying into an investment account.

Crowdfunding

Crowdfunding involves pooling funds together with other investors. This strategy has the following advantages: minimal risk, as total investment is spread across multiple investors; low entry cost (some platforms offer tiers as low as $10).

Fundrise, a US-based platform, was one of those pioneers in real estate crowdfunding. There will be many more opportunities to invest via crowdfunding in the future. Fundscraper is a Canadian alternative to Fundrise (minimum investment of $5000).

There are real risks associated with crowdfunding. For example, you could lose your entire investment, or be unable to access the funds in an emergency due to their illiquidity.

You can find more information about crowdfunding in Maple Money’s last month’s article, where he provided a beginner’s guide to crowdfunding real estate.

Live and Flip

This involves buying a house with the intention of living in it, while renovating/rehabbing it to eventually sell it at a profit.

A word of caution. You may remember hearing about a friend who had just moved into a new place. It ‘just requires a little bit of work’. Most people underestimate the amount of work, cost and time involved in home renovations.

Many homebuyers with good intentions who start on this path often end up in over their head with the costs or scope of projects.

TAXES

Real property can be owned in a variety of ways. You may own it outright, as a joint tenant with survivorship rights, as tenancy in common or through forming a corporation. Each has, of course its own tax implications.

Consult a professional if you are unfamiliar with the various types of ownership, and their associated tax obligations. This will help you avoid unpleasant surprises.

When is the best time to invest in real estate, and how much should you invest?

Answers to these questions are entirely dependent on your current financial situation. But investing in real estate is a great option to increase your wealth and gain independence.

This is the ideal opportunity if you want to invest in a way that will produce a steady income without requiring too much of your time. You may need some time to start. It will be worth it, as you will then have plenty of time to do other things.

Many people believe that real estate investing requires a large amount of money. This is not true. This is a great option for those who are looking to make smart investments in real estate.

Try investing in real estate non-traditionally if you want to protect assets, build equity and earn passive income without having to deal with tenants, repairs and noise.