Since the 1960s, real estate investment has become the number one method of wealth building in the U.S., according to Real Wealth. Knowing that, if you want to build wealth, you probably want to invest in real estate, but what if you lack the funds to purchase lots or a home?
REITs and Online Platforms
You can invest in a real estate investment trust (REIT) or use an online real estate platform to invest. Neither of these options requires you to purchase land or a structure directly. By investing using a REIT, you can get started with the same amount of money as a stock purchase requires. Real estate investor Patrick Carroll has explored these investment avenues as part of his real estate portfolio.
Two Types of REIT
According to Nerd Wallet, you can buy traded or non-traded REITs. If you’re a new investor, start with a traded REIT that you buy shares in through your stockbroker or financial advisor. Although typically considered a buy-and-hold investment, if you need to liquidate, selling a traded REIT proves easier.
A non-traded REIT may appear a more lucrative option, but valuing them proves tough. Selling them can prove complex, too.
Online Real Estate Platforms
These investment platforms don’t require you to buy property directly, but you do need wealth to use them. They won’t work as a method of initial wealth building. To purchase on these platforms, an individual must have earned accredited investor status from the Securities and Exchange Commission (SEC). To qualify for this status, a person must have a net worth of at least $1 million and an annual income of $200,000 for three years running. If they’re married, the household needs a combined income of $300,000. The net worth assessment cannot include the person’s primary home.
Emerging Options for New Investors
Those who lack the funds to buy a property alone might consider cooperatively buying a property. Some websites offer buy-in status to any who can afford the investment, while others form a co-op with friends. By pooling your money, a house that seemed like an impossible purchase can become attainable. In some cases, the co-op owners reside in the home, and in others, they rent it out, dividing the proceeds after having paid the mortgage payment each month.
You have a few options if you want to build wealth by investing in real estate. The real estate industry offers options for those who don’t want to directly purchase property, including REITs and online platforms.
