While real estate remains a lucrative venture, many people are ceasing from venturing into the industry through the traditional sense. People are shying away from becoming landlords for some reasons like the high cost of acquiring property and the challenges associated with being an actual owner of a property.
While being a landlord is a turn off for some, there are ways that you can still leverage on the profitable real estate industry without having to own a home.
1. Invest in real estate equity
REITs or real estate investment trusts can be a great way to invest in the industry without owning property. REITs are firms that deal with real estate affairs like offering mortgage bonds or mortgages.
They have listed companies that interested people can buy equity in the firms and earn dividends.
Other than owning property, REITs also give cash flow to its clients. REITs are grouped into categories depending on the genre of the property class they invest in.
Investors need to look out for the private REITs as they are quite a risky venture.
They lack transparency, charge high fees and often require liquidity. This makes them susceptible to high risk especially given the volatile state of the real estate market. Investors should instead look to venture with publicly traded firms.
2. Venture into home construction
Even though we have recently witnessed a slack growth of the value of properties, the demand for capital is still significant. Subsequently, there is areit need for new features to be developed. This creates an opportunity that investors that do not want to own homes should look to leverage on.
The increasing demand for property means that business will boom for constructors for the foreseeable future. Investors can look develop a farm and later sell it to buyers.
It may be a worth it to closely monitor property developers like Pulte Homes and Lennar among others.
3. Venture into real estate focused companies
Though closely similar to REITs, these have a bit more freedom to put back the gains for expansion.
Their shares also tend to pay dividends at lower rates than those of REITs. While some other businesses like resorts and malls diversify their portfolios to venture into real estate, firms like CBRE Group primarily focus on real estate.
All these can allow you to benefit from the real estate market without necessarily taking up ownership of a property.
4. Venture into the real estate mutual fund
Small investors can turn to REMFs to buy equity in real estate firms. A large proportion of the funds will go to developing properties.
REMFs can allow investors to put money in a wide array of features and the funds are quite liquid in REMFs unlike in real estate. These have lucrative returns and offer a lot more flexibility to investors.
The real estate industry is quite lucrative. If you are an investor seeking to venture into the real estate market while not putting your finances at risk and ensuring they have reasonable returns, these four ideas should help you leverage on the market without owning property.