8 of the Best Ways to Invest in Real Estate

The average price of new listings skyrocketed by 32{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} since the beginning of the pandemic. A perfect storm of low interest rates, low inventory, and high demand fueled the increase.

For those looking to get into real estate investing, your first thought is probably to sit it out until the market cools down.

You’re going to miss out on incredible investing opportunities with that attitude. That’s because there are different ways to invest in real estate.

It’s possible to invest with little money upfront, too. Which types of real estate investing you choose depends on your goals, financial situation, and which types of investments you prefer.

Do you want to know more? Keep reading to learn the top ways to invest in real estate.

1. Buy to Rent

This is one of the most common ways to invest in real estate. Buying rental property seems easy on the surface to beginner investors.

You buy the property, list it on the market, and find a good tenant.

There’s a lot more to it than that. You need to buy a property that will increase in value over time. The property needs to get rented at a profit.

You need to abide by landlord-tenant laws, know how to run background checks, and screen applicants. As a landlord, you’re responsible for repairs and maintenance of the property.

Buying a rental property isn’t easy, but if you learn how to manage it well, you can scale and have several profitable rental properties.

2. Fix and Flip

Fix and flip is a type of real estate investment made popular by home improvement TV shows. The main characters go out and scout properties.

They’d find one, run a few comps, and decide to buy it. The rest of the show gets devoted to the renovation and resale of the property.

This type of real estate investment is nothing like what you see on TV. It’s not a neatly packaged form of investment.

It can be troublesome if you don’t know what to look for. At the same time, it can be very profitable, netting thousands of dollars per deal.

You don’t need to put down a lot of money to get started, either. If you find this investment idea appealing, find out more about buying as-is properties.

3. Crowdfunding Platforms

What if you have a few hundred dollars and want to invest in real estate. There are some options available, but there’s one that will let you in on large deals with a small investment.

There are crowdfunding platforms that let you get started for about $500. They don’t require you to be an accredited investor, either.

That opens the door to commercial properties like office buildings and shopping centers.

Apps like Streitwise, RealtyMogul, and Fundrise lead the way in real estate crowdfunding. Just like every other type of investment, you have to do your homework and research projects before investing.

4. Rent an Existing Room

Do you have extra space in your home going unused? Rent it out for extra cash.

Instead of spending that cash, use it to invest in real estate. The good thing about renting a room is that you don’t have to do much to prepare for it and there are few upfront costs.

You just have to find the right person to live in your home.

On the downside, you have someone living in your home. You’ll have to decide if the extra income is worth it or not.

5. Build an ADU

If you’re not a fan of having someone living in your home, you can still make use of your property. You can build an accessible dwelling unit (ADU).

This can be a simple studio or one-bedroom apartment. Since it’s separate from your property, you don’t have to worry about privacy issues.

There are upfront costs to having an ADU, but you can make them up in the rental income and resale value of your home. 

6. Real Estate Investment Trusts

Real estate investment trusts are corporations that own commercial properties. You can invest in the trust the same way you’d invest in a company when you purchase stock.

These usually pay high dividends, but they’re not guaranteed. You need to research the REIT and assess how much you want to risk before you make the investment.

If you’re just getting started, buy REITs that get traded on the stock market.

7. Real Estate Mutual Funds

A real estate mutual fund is a collection of real estate investments packaged together as a single financial product.

Real estate mutual funds let you invest in several types of real estate investments with one investment. For instance, you might find a real estate mutual fund that specializes in mortgage REITs or traditional REITs.

8. Real Estate Partnerships

You might want to start out small in your local area. Resources are limited and you’re not sure how to get started in real estate investing.

There is good news. You can find another real estate investor and form a real estate partnership.

This lets you combine resources and expertise and split the profits. A partnership can be between two or more investors.

Top Ways to Invest in Real Estate

There’s no question that real estate is a great investment option. Whether you are a beginner or an experienced investor, you can use one of the ways to invest in real estate listed in this article.

If you get a real estate property, you’re going to need tips to fix up the property. Visit the home page of the blog for the latest home improvement ideas.