5 Ways to Invest in Real Estate When You Don’t Like to Be a Landlord
Being a landlord and managing property is not easy. You are probably aware of the common ways of real estate investing. However, are you looking to invest in real estate without being a landlord? Here are several ways to invest in real estate without being a landlord.
5 Ways to Invest in Real Estate Without Being a Landlord
1. Invest in REITS
REITs also known as Real Estate Investment Trusts are companies that own money-producing real estate throughout several property segments. Real Estate Investment Trust Companies need to meet a certain number of requirements to be entitled as REITs. Almost all REITS do their trading on well-known stock exchanges, and they give a lot of benefits to investors.
Advantages of REITs
REITs provides their investors with numerous benefits including the advantages of investing in a publicly-traded stock. REITs provide their investor’s income through 90% of their dividends. REITs have a strong diversification in their portfolio, which makes investing in REITS stress-free.
Disadvantages of REITs
REITs have some disadvantages, however, some of which include fees, interest rate risk, lack of liquidity, and tax.
2. Syndication
Syndication is a way to invest in real estate even without the full amount. Syndication in real estate is usually done through social media/website, where investors can connect to property investments.
Advantages
Syndication is great because it gives companies money that they might never be able to have. Also, when you invest in Syndication there are no investment fees, and it is a fast way to raise money. Furthermore, there will be a sponsor who is responsible for property management, so you will not have to collect money from tenants or manage tax responsibilities.
Disadvantages
One of the biggest disadvantages of Syndication in real estate is that the investments you make are not liquid investments, which means that it cannot be easily converted into cash. It will take about three to seven years to be able to get paid from the real estate Syndication deal. Moreover, you do not have much control since you are not the person in operation, the sponsor is.
3. Online Real Estate Investment
Online investment websites are excellent if you want to manage your real estate work all from the comfort of your own home. You can use sites like Peerstreet and Fundrise to start today.
Peerstreet investors are cannot invest in actual properties, they can invest in backed loans. To further my explanation, investing in backed loans means that you are investing in people’s debt. Please note that you need to be an accredited investor to get to sign up on Peerstreet.
Fundrise is simple and cheap to use, all you need to get started is $500. Fundrise is like crowd-sourced investing, where you can pool your own money with other people to buy properties.
Advantages
A nice advantage of online real estate investment is that you do not have to hold inventory, because you are not the direct owner of the property you are investing in. another advantage is that you do not need employees because all the work can be done by yourself. However, if you do turn your investing business into a large one, then you might consider having an employee to help you.
Disadvantages
Investing in online real estate takes time, like any other investment. So be patient to wait a couple of years to get your money and profit back.
4. Mortgage Investment Funds
Mortgage investment funds is a pool of money that gets invested in private mortgages. Each investor has ownership over their own shares in the fund. This investment offers a good way to evenly spread the risk among other investors. Please note that you may want to take advice from a financial advisor if you are just starting out.
Advantages
Some of the advantages of mortgage investment funds include the ability to finance multiple properties, high loan balances, and the flexibility in size and type of real estate you are able to purchase.
Disadvantages
Some of the disadvantages of mortgage investment funds ate that there are larger interest rates, lower debt to income ratios needed, and higher credit score and cash reserve requirements.
5. Hire a Property Management Company
If all else fails, another option to invest in real estate without being a landlord is hiring a property management company. A property management company deals with all the tenants and prospects. These companies are great because they save you so much time and stress from marketing your rental property to collecting rent. A property management company also handles maintenance issues, responds to any of the tenant’s complaints, and pursues evictions.
Advantages
There are plenty of advantages when hiring a property management company. You will get high-quality tenants. Some of the benefits of high-quality tenants are that the tenants will rent long-term, they will pay the rent bill on time, and overall will cause fewer problems than a regular tenant would. Also, there will be less repair and maintenance costs. By hiring a property management company, tenants will gain access to professional maintenance. Finally, there are plenty of personal benefits such as less stress, more time, and more freedom.
Disadvantages
The biggest disadvantage of hiring a property management company is that it can be costly. Therefore, you will need to do your calculations and see if you will get a good profit even after hiring one. A property management company takes about 5-20% a month from rent.
Conclusion
At the end of the day, there are many ways to invest in real estate without being a landlord, you just need to know which way is right for you. Try out a way listed, seek some professional advice, and be sure that you will find a way that suits you.