Have you ever wondered what the best way to start investing in real estate might be? The answer may surprise you.
Investing in real estate has captured the attention of the masses for one reason: financial freedom. No investment opportunity, at least that I am currently aware of, is capable of offering more to those who make the commitment to invest in today’s real estate market. Not only has housing become one of the best vehicles to invest in to realize returns and attractive yields, but it can also be done by anyone in just about any way; the possibilities are essentially limitless.
It is important to note, however, that the barrier to entry into the world of real estate investing is relatively low; just about anyone interested and willing to commit can make a name for themselves. The threshold separating real estate investors from spectators may be easier to cross, and even cheaper, than most anticipate. In fact, my partners at Grand Coast Capital Group have made it possible to start investing in real restate without capital of your own. Grand Coast targets lending opportunities that do not necessarily fit within the parameters of conventional bank financing, and therefore caters to those investors looking for the right financing to get a foot in the door.
If money isn’t the thing preventing you from getting started, but rather a fear of what investing entails, there are simpler ways to get your feet wet. For what it’s worth, investing in real estate is as easy as taking a proverbial walk down Wall Street. Those looking to start investing in real estate, but aren’t necessarily sure they are ready to make the commitment that has come synonymous with flipping houses, need look no further than real estate investment trusts (REITs).
Real estate trusts are currently at the top of investors’ wish lists who place an emphasis on reliable yields and attractive returns for the foreseeable future. However, you do not need to be an expert in the stock market to take advantage of the opportunity they currently offer. For what it’s worth, an REIT portfolio is one of the cheapest and easiest ways to start investing in real estate.
According to Investopedia, an REIT “is a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock. REITs provide investors with an extremely liquid stake in real estate.”
“REITs, an investment vehicle for real estate that is comparable to a mutual fund, allowing both small and large investors to acquire ownership in real estate ventures, own and in some cases operate commercial properties such as apartment complexes, hospitals, office buildings, timber land, warehouses, hotels and shopping malls,” said the educational investment site.
Of course, to understand why REITs may be the best way to get into real estate investing, it helps to compliment them with some historical context. At the time of this writing, REITs are just starting to hit their stride; they have outpaced the broader equity markets for the better part of 2016 and are expected to not only maintain momentum, but build upon it in the coming months. For what it’s worth, the health of the real estate market has REITs firing on all cylinders at the moment.
Of particular importance, however, is the upcoming addition of a new real estate sector on the S&P 500 that will remove REITs from under the financial umbrella that currently does little to support them. Instead of hiding in the shadows of banks and similar financial institutions, REITs will be awarded their own prominent spot in a new real estate sector come September. The move, which has been expected for quite some time, will increase the exposure REITs receive almost exponentially. Industry pundits and experts are convinced the new sector will become the beneficiary of an influx of capital, given that mutual fund managers will need to diversify accordingly.
It may surprise many to hear that the latest vote to remove the United Kingdom from the European Union, otherwise known as the “Brexit,” could benefit the right REITs in a big way. With uncertainly sending the U.K. housing market reeling, our friends from across the pond are likely to seek a safe haven for their capital.
What better place to store their money than in a real estate sector that is just starting to hit its stride?
In fact, it is no longer a question of whether or not British investors will infuse the U.S. real estate market with capital, but which sectors are most likely to become the beneficiary of such an allocation. If history has taught us anything, the safe bet is on commercial real estate, which bodes well for stateside REITs. Foreign investors have already taken note of how well commercial real estate is doing in the United States, given recent yields and ever-attractive rental prices. The impending influx of potential British capital, however, could create the perfect storm in a sector that has already done very well for itself.
At the very least, REITs look very promising at the moment, and there is no reason those looking to break into the real estate investing industry couldn’t use them as a platform to launch the rest of the careers. If for nothing else, REITs offer potential investors a relatively cheap alternative to investing in physical properties first hand.
If you want to start investing in real estate, but aren’t sure which direction to head, consider REITs; they offer a very low barrier to entry and come complete with attractive dividends.