Real estate investing isn't as hard as it sounds.
Rental property can be a great player in your overall investment strategy, an excellent way to build wealth and a great way to diversify your portfolio. Not to mention there are amazing tax benefits.
These days it's much more accessible then it used to be. With as little as $500 dollars you can dip your toes in the real estate market with Fundrise.
There are a number of ways to invest in real estate with any amount of money and time commitment. Here we will talk about our favorite two.
We personally invest in both and have seen excellent returns.
Preserving Wealth vs. Building Wealth
Your money is getting decent returns in the stock market, so why invest it in real estate market? It just seems riskier and a ton more work, right?
Well, just like diversifying your investments in the stock market, it is also important to have diversification in your portfolio as a whole.
Investing in the stock market is great over the long term for reaching future goals like retirement. It preserves your money by providing small gains over many years protecting your money from inflation.
However, most of us will not get rich investing in the stock market alone.
You can grow existing money in the market but it's not going to generate a meaningful income for you, passively. That's where real estate investing comes in.
Owning real estate is like running a passive income business. It provides an excellent and for the most part reliable income stream.
You can choose to be as hands off or as hands-on as you want throughout the whole process. There are companies that handle it all from soup to nuts. All you will need to provide is your John Hancock.
Investing in real estate without buying a property.
Maybe you don't have the time or the funds to invest in a single or multifamily home but that doesn't mean you can't get into real estate investing.
Fundrise is a crowdfunded platform that allows average investors access to the commercial real estate market with as little as $500. They pool investments from many investors and invest on their behalf in opportunities that would otherwise be difficult or overly expensive to find or access.
They do a good job of explaining how it works in this video.
If you are interested in getting started, we wrote a review of the Fundrise here. And if you have any question, we're here to answer them.
RealtyShares, much like Fundrise, is also a crowdfunded platform. The main difference is RealtyShares focuses on the residential real estate market. That's normal homes instead of medium to large size buildings.
RealtyShares also acts more like Lending Club, only you pick individual properties/deals you want to invest in. With Fundrise it's all a bit more automated under an eREIT and you just invest in general areas instead of specific deals. This is our review of RealtyShares.
If your looking for something a little more hands on...
These are companies that handle it all from soup to nuts. You can buy a turnkey property with tenants and a property manager in place before you close.
Roofstock: Want to armchair the entire purchase and management process of a rental property yet still take all of the gain? That's Roofstock. Laura and I own three properties through them and we couldn't have enjoyed the process more.
You can also choose your own team with Roofstock although they provide you with awesome recommendations every step of the way.
If you want to learn about our experience, read our review (our interview with the CEO).
Memphis Invest: While we haven't actually invested with these guys, we've heard amazing things (they're pretty popular). Unlike Roofstock, they don't really have a digital platform, you also need to commit to them managing your property.
You need to first understand the entire rental property investing process.
Before we bought our first property, we did a ton of research. It's one thing to invest $500 in Fundrise and it's another to drop $25,000+ on a full rental property.
We took everything we learned and created a few awesome resources to help answer all your questions. If you're seriously interested in growing passive income and investing in rental properties then you need to read or listen to our Investment Property 101 series:
- Part One: Are You Ready To Be A Landlord?
- Part Two: The Math Behind Investing
- Part Three: The Power of Leverage
- Part Four: Forming A Real Estate Team
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