Real estate is a smart and practical choice for new and experienced investors alike. But, many shy away from it because they don’t want the responsibilities of owning property. Fortunately, you can still invest in real estate assets without purchasing additional property.
Recently, investors are choosing alternative real estate options to take advantage of the booming property market. These non-traditional assets have higher initial minimums and upfront investments fees. But, they are offset by lower transaction costs compared to conventional property assets. Additionally, they have lower turnover rates in the market.
If you are ready to create your investment portfolio, why not start with alternative investments? There are different options available for you to choose from. It is simply a matter of determining which one is best for you.
Alternative Investments in Real Estate
You have a range of alternative real estate assets to choose from when you decide to go down this route for your portfolio. A good choice would be one that will do well regardless of the economy’s situation. An example of this would be self-storage units. From Marietta, Georgia to San Clemente, California, these facilities are in high demand because people always need a place to store their belongings. You can invest in this through the traditional way, which is running your own facility, or through a real estate investment trust (REIT).
- Real Estate Investment Trust (REIT)
REITs are ideal for investors that aren’t interested in traditional real estate but want to reap the benefits of owning property. As one of the better performers in the market, investors look to REITs to gauge how the real estate market would fair in the near future.By investing in the company that owns the income-producing property, you earn passive income without the stress and hassle of being a landlord.
- Real Estate Exchange-Traded Fund (ETF)
An exchange-traded fund (ETF) is an ideal choice if you want a diverse set of investments. ETFs are collections of stocks, commodities, and bonds that offer lower expense ratios. Although this type of alternative investment is not limited to real estate, some ETFs focus on those assets. These ETFs typically invest in stocks that are issued by REITs.
- Real Estate Mutual Funds
A mutual fund, in general terms, is a financial vehicle that a group of investors use to invest in securities. It is professionally managed by an individual or firm to generate capital gains or income for the investors. Real estate mutual funds focus on REITs and other property-related stocks. The advantages of a mutual fund are diversification, lower transactions costs and professional portfolio management. These are ideal if you are just starting your investor journey.
It is never too early to create your investment portfolio. It might seem like an intimidating endeavor, but there are ways to ease into it. The real estate market, while prone to fluctuations, is one of the more dependable options. Starting your investor journey there allows you to learn in a slow and steady pace. Choosing to do so with alternative investments mitigates some of the risks involved with real estate. Invest in your future by investing in the property market.