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Today’s real estate investors enjoy more investing options than at any point in history, including opportunities to get started investing with very little capital and to create passive income that doesn't require any of your time.
REITs (Real Estate Investment Trusts), crowdfunded real estate, and REIGs (Real Estate Investment Groups) are the easiest ways to get started investing in real estate. New investors won’t have the hassle of managing properties, but will still generate passive income every month.
Keep reading to find out how REITs, REIGs, and crowdfunded real estate work, and learn how you can get started investing in real estate on nearly any budget.
3 Easy Ways To Get Started In Real Estate
Traditional real estate investing requires a great deal of cash investment, research, and risk, but there are easier ways to invest in real estate.
Even if you’re on a tight budget or have no prior knowledge of real estate investing, you can still get started with online platforms that allow you to learn as you go.
REITs and crowdfunded real estate are excellent ways for beginners to start investing. People with experience and plenty of capital may find REIGs an easier way to invest than flying solo.
In this section, we explain three easy ways to get started investing in real estate, including REITs, crowdfunded investments, and REIGs.
Keep reading to find out which one is right for your level of interest, experience, and budget.
1. Invest In REITs
REITs (Real Estate Investment Trusts) are companies that own and operate income-producing real estate, and most of them trade on the stock exchange.
Investors who buy into the REITs don’t have to take on the responsibilities involved in traditional real estate investing, such as:
- Property research
- Overseeing of rental units
The REIT takes care of all administrative functions, which makes REIT investing a truly passive activity.
REITS can produce passive income, which most payout in quarterly dividends.
In fact, U.S. REITs are required to pay out at least 90% of their income to shareholders annually.
This means that as the assets within the REIT perform better over time, the more investors will earn.
REITs are a super-easy way to get started investing in real estate because they don’t require a significant amount of your time or money.
You can invest in publicly-traded REITs through a broker or brokerage firm, the same way you do with stocks.
Keep in mind that investors that choose REITs or eREITS to invest in real estate will want to hold on to these assets for the long-term, (usually 5-7 years).
That way you can allow your asset to grow as the market grows.
In addition, because it costs a significant amount of money for these platforms to manage and operate the properties, they will want you to keep your money still for a while so they continue to own real estate.
While private REITs can be riskier than publicly-traded ones, Fundrise has an excellent history of high returns on investment.
2. Invest In Crowdfunded Real Estate
Crowdfunded real estate means that investors pool their money together with other investors to make purchases.
With crowdfunded real estate, you buy into a group of properties by purchasing a fraction of the total group investment, then you share ownership with other investors.
Crowdfunded real estate can be an excellent way for beginners to start investing in real estate without taking big risks, and many online platforms allow you to get started with a low minimum deposit.
To get started investing in crowdfunded real estate, begin by comparing several online platforms to compare their reputation, costs, and fees.
Crowdfunded real estate is not always a liquid investment, so you should go into it with a long-term mindset.
Early withdrawal fees can be harsh, so you should plan to allow your investment to sit for roughly 5 – 7 years (depending on the platform).
Returns on crowdfunded real estate aren’t typically as high as traditional investing, however, you don’t have to invest $100,000 the way you would in traditional real estate transactions.
If you’re considering REITs or crowdfunded real estate, check out the Fundrise platform before signing up anywhere else, since its returns are historically outstanding.
For example, in 2021, Fundrise clients averaged a 22.99% return, which was more than the average return on U.S. public REITS, the S&P 500, foreign stocks, and bonds.
Fundrise is a real estate crowdfunding platform that allows any U.S. resident to invest in a portfolio of U.S. real estate projects for as little as $10.
It can help you meet any of your investment goals by choosing a goal-focused strategy, such as supplemental income, balanced investing, or long-term growth.
Fundrise brings together the best of REITs and crowdfunding with its unique eREITs investments, which lower the barriers to entry into real estate investing and allow you to learn as you go.
3. Invest In REIGs (Real Estate Investment Groups)
REIGs are Real Estate Investment Groups made up of private investors who pool their money to buy real estate.
How REIGs work and what investing approach they take depends on how the group sets itself up.
Unlike REITs and crowdfunded real estate, when you invest in a REIG you’re investing in a physical property, creating a more “hands-on” approach to investing.
When you invest in a REIG, you share the properties, finances, and responsibilities with other investors, which can make it an attractive option for people ready to invest more money but who are still gaining experience.
It's Easy To Get Started In Real Estate Today
Real estate is an excellent way to diversify your assets so that all your investments aren’t tied up in one place, such as the stock market.
A recent Minority Mindset poll found that 48% of Minority Mindset followers invest in real estate, 72% of them say they LOVE it, and 14% use the Fundrise investing platform.
REITs and crowdfunded real estate can be a good opportunity for absolute beginner investors with no prior knowledge of the real estate market.
REIGs may be a good fit for more experienced investors ready to take the leap into owning physical properties.