Do you know that you can invest in real estate without being a landlord? It sounds unbelievable, but it is very possible. While being a landlord may be your end goal, you can start with the little capital you have so far. If you are looking to invest in real estate but have no idea how and where to start, there are many ways to do so without being a landlord. I will outline the best six ways to do so.
6 Best Ways to Invest in Real Estate Without Being a Landlord
1. Rent out a room in your house
Are you currently living in a two or three-bedroom house and yet only need one? If your lease agreement allows for sub-leasing, consider renting out the other rooms. You will be surprised how many potential tenants you might have in your area. Adding roommates will provide some ease in your rent or mortgage payment. In case you are not comfortable with a long-term arrangement, consider platforms for short stays. These include sites like Airbnb. You will have the advantage of receiving only pre-screened tenants and some level of guarantee of protection against damages. What’s more, you might actually end up making more money through short-stay clients than long-term renters!
2. Buy into Real Estate Investment Trusts (REITS)
Do you know that companies that own real estate are actually looking for more funding from people like you to invest in more properties? When you invest your money with them, they invest in high-return projects such as office buildings, retail spaces, residential buildings, and hotels. They also pay higher dividends than your average savings and investment cooperative. As of January 2023, according to data analyzed by NYU’s Stern School of Business, REIT dividends have paid an average of 3.93% on dividends. You can, therefore, start with the prescribed minimum investment and progress as you earn more. Furthermore, you can reinvest these dividends and grow your investment in the REITS with time. Think of it like the stock exchange market that works more like a mutual fund. To start, open a brokerage account through which you will purchase REITs from publicly-trading firms.
3. Use online investment platforms
Nowadays, there are online platforms for literally anything. Should you need to connect to a real estate developer or investors, there are online platforms for this. Many of these online crowd-funding investment platforms, however, are open to only duly accredited investors who are listed in the local securities exchange body. Suppose you do not meet these criteria, worry not! There are many other alternatives for those starting out who have not yet been listed.
4. Try investing in real estate funds
There are many benefits of investing in real estate. Real estate funds are basically sold by a manager who collects funds from several investors and investments in several high-return properties. The choice of investment is purely up to them and their expertise in the industry. Your part will be to channel your investment and reap the returns of investment alongside fellow investors once the property is up and running. This is a simple way of investing in real estate without the tasking responsibility of handling the project execution and management yourself.
5. Become a middleman for investment properties
Do you have a great network of people capable of and looking to invest in real estate properties and are willing to do the legwork on their behalf? This might be your best option for investing in real estate without being the actual landlord. A real estate agent or broker is one who is qualified to put a piece of property under contract and find buyers for it. You make your commission from the sale of the property as a mark-up of the price. On a light note, the Washington Post terms thick skin and a light stomach as one of the qualities to become a successful realtor. With this, you will realize your real estate investment ambition without becoming a landlord.
6. Partner with an active investor
You can be the silent partner to a well-established real estate investor. They already have access to capital or are already landlords for several properties and may have an opportunity for a buy-in. This is an excellent passive approach where you can be in the background while your money speaks for you. Of course, you need to trust that the active investor has the ability to make wise choices and manage the properties as well. This allows you to also learn the tips and tricks of the game before taking up the illiquidity and risk of property ownership.
Do you still need more convincing? You can use any of these ways to invest in real estate without being a landlord. The most important thing is to take the first step. Among these six best ways, you are sure to start your way into real estate investment and grow to become a landlord.