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How to Invest in Real Estate (Without Actually Buying Property)

Investing in real estate is one of the 10 most popular (and profitable) ways to invest your money. People buy properties all around the world and earn money by renting them out. They often use professional real estate agents to help them find houses for sale in New York, Vail, or Florida, or even outside the U.S. in places like London and the Caribbean.

However, buying a property is quite challenging as it requires a large initial outlay of capital, and so, is not affordable for everyone.

Luckily, buying property is not the only way to invest in real estate-- there are other, more affordable ways to make real estate investments. In fact, real estate investments can be considered preferred to some other forms of investments as it is more stable than the stock market. 

A great way to ease into investing in real estate is by buying shares of real estate companies. Besides that, you can also invest in different kinds of trusts and funds. For instance, there are investment opportunities in REITs, ETFs, real estate mutual funds, and home construction companies.

All of these have their benefits and drawbacks, and by gaining more insight into them, you can decide which is the best for you. Keep reading to learn more about how to invest in real estate without buying property.

1.   Buy shares of real estate companies

Buying shares of real estate companies is definitely what many investors start with if they’re not buying a property. These companies could be real estate listing companies or property developers. Besides these, you can also invest in companies that are related to real estate, such as ones that provide different services to property companies that produce construction materials. This kind of investment is a great way to get exposure in the property market, without having to invest a lot of money at once in a single property.

To observe your investment options, you should take a look at the list of stocks in the real estate sector. Then, you should decide where and how much you’d like to invest. You can use a share trading platform or a stockbroker to buy stocks. After you’ve purchased the desired stocks, you should monitor their performance and keep investing in a smart way.

2.   Invest in REITs - Real Estate Investment Trusts

Another plausible approach to real estate investments is investments in real estate investment trusts. This is a great option if you don’t want to be a hands-on property owner. But what are REITs exactly?

REITs are managed funds that combine money from several investors. The money is actually in a trust and it is used to build a portfolio of properties that generates income. Most frequently, REITs lease the properties in their ownership and collect rent. This income is then shared with the investors.

You can view and research available REITs online. Then, you can choose which and how much you’d like to invest. Finally, you should find a broker or trading platform and purchase units in the desired REITs. If you’re interested in gaining more knowledge in this area, you can get a certificate in real estate investments.

3.   Invest in real estate ETFs - Exchange Traded Funds

Furthermore, there is also an option to invest in ETFs, exchange-traded funds. These are managed funds that you can buy or sell on the stock exchange. Most usually, they own shares of various real estate companies that are listed on the stock exchange.

The best way to start investing in ETFs is to research real estate-focused ETFs. You can choose the one(s) you like and decide how much you want to invest. Opt for a stockbroker or a trading platform to purchase them.

You can also invest in other real estate-related companies, such as a real estate app development company or something similar. There are also many companies working on developing all kinds of handy tech tools for real estate agents.

4.   Invest in real estate mutual funds

Similar to the previous type of investment, you can also invest in real estate mutual funds. You should research reputable real estate mutual funds that do business well and that have low costs with the possibility for great returns. This is a great way to get portfolio diversification.

5.   Invest in home construction

Besides all the previously mentioned ways to invest money in real estate that exclude buying property, you can also opt for investing in home construction. The industry of homebuilders is responsible for developing new neighborhoods from scratch.

When evaluating different home building companies, consider what kind of real estate the company focuses on. Their performance is tightly connected to the global and local economies.

All in all, there are numerous alternatives to investing your money in real estate, without having to buy actual property. Do thorough research and find out more about the plausible ways to invest money in real estate and choose the best one(s) for you.

About the Author

Jess Cooper is a part-time journalist and blogger based in Sydney, Australia. Her focus is real estate in Australia, including searching for dream houses for sale in Narooma, Sydney and other Australian cities and towns. She also likes writing about business and lifestyle.

Last updated: 20 Sep 2022

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