By now, maybe you’ve gone down the Zillow rabbit hole, or been on vacation to see what your life could be like if you were paying your same rent in a different location. Did you know that it’s just as easy to start investing in real estate online from the comfort of your home? There are several ways to get into the real estate market, regardless of the amount of capital you’re starting with, and you don’t even have to leave the comfort of your own home. Here are some of the most popular ways to get into passive real estate investing online.
Regardless of your accreditation status, you can invest in publicly-traded real estate investment trusts (REITs). Buying shares in a publicly-traded REIT is similar to and as simple as buying stock through an online brokerage like Robinhood or eToro.
Most REITs contain a portfolio of income-producing properties. They collect rent on the properties and then distribute at least 90% of their income to investors via dividends. Another form of REIT buys mortgages instead of properties, but it also returns 90% of its income to investors via dividends. The dividend payments you get on REIT shares will likely be higher than what you would receive on other dividend stocks.
Not all REITs are publicly traded, although it’s easier to invest in those that are, and investing in some types of REITs may require you to be an accredited investor. Additionally, it can be difficult to place a value on those that aren’t publicly-traded because they may not report as much financial information as publicly-traded REITs. It typically takes less than 15 minutes to open a brokerage account and start trading REITs and other stocks.
Another way to invest in a real estate fund without leaving your home is through an exchange-traded fund focused on real estate. As the name suggests, ETFs are traded on stock exchanges, so you can buy into them just as you would a publicly-traded REIT.
Some ETFs invest specifically in REITs, but the benefit of buying an ETF is that you can get exposure to multiple REITs with a single investment. ETFs can offer better diversification because they often invest in REITs that span a variety of different property types, from offices to malls, hotels and other property types.
You can also invest in mutual funds focused on the real estate sector. Mutual funds are similar to exchange-traded funds, but ETFs often have lower investment minimums than mutual funds. Additionally, ETFs can give you more control over the price of your trade. However, if you want to set up automatic investments and withdrawals, a mutual fund might be the better option.
Investing in real estate can offer a wide array of opportunities, but you should understand your options before you dive in. A key advantage of the sector is that it is possible to invest in real estate online so that you don’t have to deal with tenants or anything else involved in being a landlord.
One of the easiest ways to invest in real estate online is through a crowdfunding platform like Yieldstreet. Fin-tech platforms often pool multiple investors’ resources, using their money to fund a development or purchase a property. Yieldstreet targets properties primed for growth, and when an investment matures, any investor payout is typically proportional to the amount of money an investor put in.
Platforms often give projected returns of each property before investing, which should allow investors to do their own due-diligence and figure out what makes the most sense for their investment needs.
Diversify Your Portfolio Today
Accredited investors may want to invest in real estate hedge funds for further exposure to the real estate market. Real estate hedge funds usually invest in REITs, although some also own property. They can serve as another way to diversify your investment portfolio.
Real estate investing offers plenty of opportunities for investors to generate passive income regardless of their accreditation status, but investors should know where to look for deals across multiple offerings and investment vehicles.
Yieldstreet provides access to alternative investments previously reserved only for institutions and the ultra-wealthy. Our mission is to help millions of people generate $3 billion of income outside the traditional public markets by 2025. We are committed to making financial products more inclusive by creating a modern investment portfolio.