Investing in real estate is an excellent way for anyone to earn passive income or invest in their future wealth. That said, investing in real estate doesn’t always mean buying a house. There are several ways to invest in real estate without searching for a property and getting a mortgage. So, if you want to learn three simple ways to invest in real estate, here’s how you can get started today.
Contents of This Article:
- 3 Simple Ways to Invest in Real Estate Without Buying a House
- Benefits of Traditional Rental Property Investment
- How Property Management Can Reduce Stress
- Find the Right Property Management Company for Your Business
3 Simple Ways to Invest in Real Estate Without Buying a House
As most investors know, now seems like a difficult time to get into real estate. Interest rates and property prices are extremely high, leaving investors wondering what to do. So, if you don’t know what your next step is, here are three simple ways to invest in real estate without purchasing a home.
- Real Estate Investment Trusts (REITs)
- Crowdfunding
- Exchange-Traded Funds (ETFs)
Real Estate Investment Trusts (REITs)
Real estate investment trusts (REITs) are companies that own income-producing real estate and pay dividends from rent payments to shareholders. Similar to mutual funds, investors pool their money together to purchase real estate. REITs may own single-family rentals, multifamily buildings, commercial properties, or a combination of property types.
Compared to traditional rental property investment, you can invest in REITs with a small amount of capital to start. Whereas if you purchase a rental property, there are several expenses to calculate and take care of before you can start earning profits.
That said, REITs are a great way to get into real estate without going through the hassle of finding, financing, fixing, and managing a rental property.
Crowdfunding
Real estate crowdfunding allows investors to pool their money with others to purchase properties. Like most other crowdfunding ventures, investors use social media and other sites to fund a new real estate purchase. Then, the investors share the profits.
Similar to REITs, you don’t need a lot of capital to start crowdfunding. Generally, you pay your share to holding companies that own and operate real estate investments. Then, your capital is used as financial backing for current or future real estate investments.
However, unlike REITs, some crowdfunding platforms have access to private market properties that can offer higher returns. Property types may include residential or commercial buildings, new housing developments, office or retail space, and more.
Exchange-Traded Funds (ETFs)
Another way to get into real estate without buying a property is through exchange-traded funds (ETFs). Exchange-traded funds are somewhat similar to stocks. For instance, you can buy or sell ETFs like regular stocks, and share prices fluctuate throughout the day as the ETF is bought or sold, like the regular stock market.
That said, ETFs hold multiple underlying assets rather than just one. For instance, they can contain many types of investments, like stocks, bonds, commodities, or a mixture. Overall, there are several types of EFTs, including passive and active EFTs, bond EFTs, stock EFTs, and more.
Benefits of Traditional Rental Property Investment
While any type of real estate investment is generally a good one, you can get some benefits from rental properties that you don’t get from other investment ventures. That said, some of the main benefits of traditional rental property investment include the following:
- Recurring Income
- Diversify Your Investment Portfolio
- Potential Hedge Against Inflation
- Several Tax Benefits
- Property Appreciation
Recurring Income
Although you can earn income with any type of real estate investment, rental properties provide consistent, recurring income. While other real estate investments can provide recurring income, rental properties are generally more predictable and consistent. Additionally, you can earn most of your income passively, as you would with other investments.
Diversify Your Investment Portfolio
If you have other real estate investments but don’t own a rental property, it’s a great way to diversify your investment portfolio. Although it’s not as simple as crowdfunding or purchasing shares online, rental properties are relatively stable and can make a huge difference in your portfolio.
Potential Hedge Against Inflation
Most know that inflation is at an all-time high right now. That said, traditional real estate investment may protect owners against inflation. For instance, landlords can charge more for their rentals during periods of high inflation. But, at the same time, they’re paying the same mortgage payment as before, allowing for higher profits.
Several Tax Benefits
Another significant benefit of traditional rental property investing is tax benefits. When you own rentals, you can write off several expenses, including:
- Mortgage Interest
- Insurance
- Depreciation
- Home Office Usage
- Necessary Repairs
- Contractors or Employees
- Legal Services
Property Appreciation
Appreciation is when an investment increases over time, and it’s one of the best ways to make money with rental properties. So, suppose you purchase a property for $150,000. Over time, perhaps over the course of 10 years, it can appreciate to a value of $200,000. Then, if you sell the property, you’d profit $50,000.
How Property Management Can Reduce Stress
Owning properties and managing tenants can be overwhelming. As such, many landlords hire professional property management to help lower stress and automate rental processes. That said, if you want to know how property managers in Northern Virginia can help your rental business, here are four common ways.
- Manage Tenant Relationships- You can count on property managers to handle tenant relationships, from tenant screenings to periodic check-ins and reminders. Hiring a good property management team can ensure a solid tenant screening process and higher-quality tenants.
- Handle Maintenance Concerns- Additionally, when you hire property management, you don’t have to stress about property maintenance. Property managers will generally hire contractors or conduct maintenance when needed.
- Up-to-Date with Legal Requirements- Following Fair Housing Laws and rental regulations is crucial for all landlords. That said, if you hire property management, they can help navigate legal situations to save you time, money, and stress.
- Organize Data and Accounting Matters- Proper accounting is one of the most important parts of any rental business–and one of the most complicated. So, if you’re having trouble keeping up with your property’s expenses and finances, consider hiring comprehensive property management.
Find the Right Property Management Company for Your Business
There are tons of simple ways to invest in real estate. However, investing in rental properties is inevitably a ton of work. You have to find a property, get a loan, prepare your property for renters, manage tenant relationships, and more. So, if you’re feeling overwhelmed with the entire process, consider hiring comprehensive rental property management.
Professional Property Management in Northern Virginia offers full-service rental management for landlords that need assistance. Whether you own one property or several, we’ve got your tenants, properties, and contractors covered with the best management services in town. Contact PPM today if you need rental management in Northern Virginia.
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