3 Ways to Invest in Real Estate Without Being a Landlord
If the idea of being a real estate investor conjures up images of receiving a frantic phone call at 2 a.m. from a tenant about an overflowing toilet, think again. While owning a property — including your own home — is certainly part of real estate investing, it is not the only way. In fact, there are real estate investing options that don’t involve home maintenance or even paying a monthly mortgage. See if any of these three options will make you rest easier at night.
Invest in the metaverse.
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The metaverse is not just the creation of sci-fi books and movies like “Ready Player One.” This 3D virtual world is here and we’re already living in it — or at least our avatars are. What’s more? You can invest in land there, and you can build whatever you’d like because here we’re dealing with screen pixels, not square footage.
“The metaverse could very well become the first step on the property [ownership] ladder,” says Kristi Waterworth, who writes about metaverse real estate investing for finance site The Motley Fool. That’s good news for those who currently find themselves priced out of the real real estate world. Of course, land in the form of a non-fungible token (NFT) might not exactly warm your heart, but there are ways of renting said land to make real money in the form of cryptocurrency, another investment opportunity. Decentraland and The Sandbox are two of the more popular virtual gaming platforms in which to do this.
The metaverse is all very speculative stuff, and you’ll have to have some risk tolerance to get in on it — though to be fair, any type of investing involves risk. Still, the global bank Citi has projected that the metaverse economy could be worth $13 trillion by 2030. The takeaway? Buy now and plan to hold onto those pixels for a while.
Waterworth does have one note of caution: It’s tempting to get in on a brand-new metaverse platform with the hopes of being the first, but it might not pay off.
“Part of what makes the metaverse worth something is the community,” Waterworth says. “And if you go into a new metaverse platform that’s empty, you’re taking a gamble that anyone else is going to be interested in it.”
Purchase REIT shares.
If trading in crypto on the stock exchange is too much of a wild ride for your wallet, you can invest in the real world through real estate investment trusts, or REITs. REITs are companies that own real estate across various sectors, including retail, office, hotel, industrial, health care, data centers, self-storage, and more.
REITs are a solid bet for many investment portfolios in that they are required by law to pay back 90 percent of taxable income to investors in the form of dividends. Of course, the pandemic has not been kind to retail and office REITs, but there are other REIT sectors that offer more stability for your investment. Like with other real estate investing strategies, plan to buy and hold REITs for at least five years or more.
Explore crowdfunding platforms.
If you’ve ever donated some money to an online fundraising campaign, whether it’s to help launch a new product or help out someone in need, you’ve gotten a taste of crowdfunding. It’s a rather social way of getting people and their wallets together in support of a common goal, and real estate investing has taken to it in a big way.
Platforms like CrowdStreet and Fundrise make investing in commercial and industrial real estate accessible to people who don’t have the benefit of millions of dollars in spare cash. With either one, you can set up an online account, learn about investment opportunities throughout the platform’s network, and make an investment that makes sense for your financial situation and risk tolerance level. (Note that there are fees based on the level of your investment.)
Is it possible to get in on any of these opportunities with smaller investments? Yes. Are you going to make millions with small investments? No. Can you build and grow a portfolio that will see some nice returns over time? Quite possibly. Real estate investing is very much a buy-and-hold strategy, so if you don’t mind having your money tied up for the next five years or more, it could be a good option for your investment portfolio.
All financial investments carry some level of risk. The information presented here is for educational purposes and should not be taken as financial advice. Connect with a financial advisor to discuss your own risk tolerance.