How to Invest in Real Estate Without Becoming a Landlord
There are plenty of great reasons to invest in real estate, from long-term growth to short-term income. Buying an apartment building or home and renting it out can be an effective way to generate cash flow, but what if you do not relish the thought of being a landlord?
Being a landlord is not for everyone, and you may not want to answer that late-night call or fix that overflowing toilet. So does that mean you have to give up on your dream of being a real estate investor? Maybe not.
Owning real estate directly is not the only way to invest, nor is it necessarily the right path for you. Here are some alternatives to consider if you want to invest in property without succumbing to the landlord blues.
Buy Some Vacant Land
One thing is certain about land -- no one is making any more of it. That means the laws of supply and demand are likely to drive up the price of land, even if the acreage in question is vacant and undeveloped.
Buying some vacant land can be a good way to invest in real estate without dealing with demanding tenants. If you want to make some money on your purchase, you may be able to rent out the lot to local farmers or others who can use it for their purposes. If you prefer, you can simply sit on the land and wait for its price to increase.
Find a Sector Fund
You can invest in real estate without ever buying land or buildings yourself. With a sector fund, you can own a piece of dozens of companies in the real estate industry, each with its own level of expertise.
There are plenty of real estate sector funds out there, and most mutual fund companies offer at least a few. You may even be able to find a real estate mutual fund in your workplace retirement plan, an additional entry point into a potentially lucrative marketplace.
Fund a Real Estate Developer
If you are curious about the world of real estate but not thrilled about becoming a landlord, funding a local developer can be a viable option. Bankrolling the purchase of local real estate or staking an existing buyer can give you the entry point you are looking for, along with an above-average return.
There are many options for investing in real estate development, each with its own benefits and potential drawbacks. It is important to do your homework and learn as much as possible about these options.
Purchase Stock in Real Estate Companies
Buying a mutual fund devoted to the real estate sector is one way to invest in retail properties, apartment buildings, and residential homes, but it is not the only entry point. If you are looking for more direct ownership, you can purchase stock in firms doing business in the real estate industry.
You may choose to concentrate on a particular part of the real estate market, such as apartment buildings, retail space, or residential homes. If you prefer to spread your money, and your risk, you can purchase stock in many different companies, a smart strategy many others already have found successful.
Real estate can be a winning investment, and many substantial fortunes have been made buying and selling properties of all types. Even so, the idea of becoming a landlord is not for everyone, and for some, the hassles of direct ownership can outweigh even the biggest benefits.
If you want to invest in real estate without becoming a landlord, the alternative strategies listed above can get you started. Each of these ideas has its own benefits and risks, so think about what you are looking for and what you are hoping to achieve.