One thing that continues to amaze me is how difficult people think it is to invest in real estate. In all reality, investing in real estate can be as easy as you want to make it! Below you will find some of the more “out of the box” ways to invest and have fun while doing so.
1. Invest in a REIT
What is a REIT (rhymes with “eat”) you ask? A REIT is a Real Estate Investment Trust. REIT’s are large funds that own income-producing real estate such as hotels, apartment buildings, self-storage facilities and retail centers. REIT’s are great to invest in for somebody who wants to get a taste of commercial real estate as the REIT handles all of the acquisitions and management! However, although the returns can be fantastic they can also go up and down quite easily with the real estate market. According to TheStreet.com, 2016’s top REIT’s were PSB, LPT, and WRE. You can learn much more about REIT’s by checking out REIT.com’s article What is a REIT.
2. A Basic Rental Property
Now, I know you’re saying “He said this was going to be creative and exciting!”. Believe me; owning your own rental property is fun and exciting! A lot of properties can be a rental property from a single family home, a duplex, or a small shopping center. As the owner (landlord), you are responsible for paying the mortgage, taxes, and costs of maintaining the property. So when setting your rent price make sure it covers those expenses and generates some profit and cash flow for yourself. Now you are generating monthly income and are having somebody pay for your investment which you can then sell in the future (for most likely a higher price than you bought it for!).
Wholesaling is when an investor purchases a home or gets a home that is under contract. Immediately, you sell the home to another investor. This means that you are not making any repairs or updates to the house. In some cases, you do not even own the home! Sometimes wholesalers will get a home under contract and then assign the contract to another investor. Most properties that are purchased through wholesaling are bought via direct marketing.
4. Invest in Non-Performing Notes
Although this may sound like a boring page from your college finance textbook, it is actually a creative way to start investing in real estate. Non-performing notes when homeowners are either delinquent or have stopped paying their mortgage entirely. When you own a non-performing note you do not own the home, just the mortgage. Therefore, if the owner fails to make their payments it is up to you to go through the foreclosure process yourself.
5. Invest in a Vacation Rental
This perhaps is the most fun way on the list! Imagine having a vacation home on Lake Tahoe or at the beach in sunny Florida and vacationing for “free”! This is quite simple to do. Pick a desirable location that has a lot of tourists, then find a property manager to help manage the property for you. When the house is rented out, you are having the property paid for and generating cash flow. You can then choose weeks out of the year to not rent out the property and enjoy it yourself. Although this may sound too good to be true, you must be weary of a highly cyclical rental nature and high management fees.