Investing in real estate builds and diversifies your portfolio. Over the last 50 years, real estate investing has become increasingly popular. Rather than owning just a primary residence, having several investment properties can be a great way to build wealth. Real estate has “intrinsic value.” In other words, its value will likely never completely go away because people are always going to need a place to live, eat and shop no matter what shape the economy is in. Because of this market resilience, real estate is considered to be an inelastic investment.
When one is just starting out in real estate investing, it is important to start small. He or she does not want to immediately dive into owning a 30-unit apartment building. Perhaps the first investment is the home he lives in. Ideally, he will be able to make a profit when he sells it in due time.
As the investor’s portfolio progresses, his next step may be buying a property in his neighborhood or nearby to rent out. In these early stages, it is important to have investment properties close by as the investor will be the landlord and when something needs to be fixed, the tenant could be calling in the middle of the night.
Another option, if being a landlord is not appealing, is to put money in a real estate investment group. The group builds or buys a group of properties then sells them to investors as rental properties. In exchange for finding tenants, handling maintenance and other management requirements, investors will then distribute a portion of the monthly profits to the organization.
Real estate investments can also act similar to stocks, by way of a real estate investment trust (REIT). REITs are similar to mutual funds. A REIT’s manager designs the real estate portfolio held by the REIT, taking on the responsibility for acquiring and managing the properties owned by the REIT. This is a more hands-off type of real estate investment. Like any other stock, REITs are generally bought and sold on the major exchanges, and thus offer the most liquid type of real estate investment.
With the passing of the JOBS Act in 2012, real estate investing has gotten even easier. Now, accredited investors (and unaccredited in some states—see the post about state exemptions) can invest in real estate through crowdfunding platforms like Loquidity. Qualified accredited investors can invest with low minimums on a property without acting as a landlord. The sponsor (the company or individual offering the property) takes care of the managerial tasks, including finding and retaining tenants.
Loquidity allows a group of investors to invest in a variety of prescreened equity and debt real estate assets, which allows investors to create a balanced portfolio with varying risks profiles. Anyone can join Loquidity at no cost, however, in order to invest in our investment opportunities, you must register and certify your accreditation status. This can be done through the homepage of our website.