Stock success can come and go, but people will always need a place to live. That’s why investing in residential real estate holds so much appeal as a wealth building tool. We scoured the web to find expert advice on how to optimize your real estate portfolio and maximize your returns. Read on to learn what we found.
Here’s some advice for those taking those first steps to building a portfolio from seasoned investors:
Use P2P (peer-to-peer) platforms dedicated to real estate:
In the beginning, crowdfunding was used by entrepreneurs seeking funds for product development and distribution. Over time, it expanded to become a tool for anyone seeking financing for a variety of passion projects and at this time, a number of real estate investment crowdfunding sites began to emerge. Early on, these sites were focused exclusively on commercial real estate investing, but today, there are also crowdfunding sites for residential real estate.
Fundrise paved the way for people fed up with commercial mortgage banks to use P2P to get a loan for primary residences. Fundrise, SoFi, Elevate, and LendInvest are now among a few of the more popular platforms to browse for investing in homes that you don’t need to live in.
Invest in real estate investment trusts (REITs):
REITs can be publicly or privately traded just like traditional equity securities (like stocks and mutual funds). With mutual funds, you can invest in a specific industry, like energy or healthcare. Similarly, with real estate REITs, you can opt to invest in residential properties (ex; apartment complexes) or you can invest in commercial properties (ex; office buildings).
REITs can be an attractive asset to help stabilize your investment portfolio. Just be sure, before you invest, to do your research on historical performance, cash flow, and the real estate market in your area to make sure you’re making a sound financial decision.
Consider real estate partnerships:
Investing in a real estate partnership bears some slight similarities to buying into REITs, except you are considered a partner (owner). An experienced property manager usually leads these partnerships, while you and other investors come in as limited partners who finance various projects. Joining a partnership can be a great way to get involved in a variety of exciting development projects without having to shell out the bulk of the cash.
Consider these three investment options as you work to diversify your portfolio, pursue additional ways to invest in real estate and increase your returns.
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