Traditionally, investing in real estate meant hefty down payments and hands-on management. Investors get more intimate with their assets and have a deeper understanding of the investments themselves. The rise of technology has, however, translated the conservativeness of investing in real estate into online platforms.
In this article, you’ll learn about the possibility of investing in real estate online while maintaining the benefits of your assets. You can invest if you’re a passive investor seeking hands-off returns. And through other options, you can enjoy a more active role in selecting properties and managing investments. You will explore options like REITs, crowdfunding platforms, and others. You will also see how you can find the right fit for your financial goals and risk tolerance.
What Investing in Real Estate Online is?
Now, let’s dive into investing in real estate online. Investing in real estate online is the participation in the real estate market without directly having a property yourself. It also saves you the hurdle of moving from one property to the other in search of a good investment. All you have to do is first look out for a platform where you can buy a property. Then you select the plan/property you are interested in and invest.
Investing in real estate online can be seen as when you eat a sumptuous cake without actually baking it. All you did was to help a baker find the ingredients that are used in making a cake. The baker then gets the ingredients, bakes the cake and you get to eat out of it.
The ingredients you help the baker select imply the process of you choosing your platforms and properties of choice. The person who bakes the cake represents the platform of your choice that manages the properties. In the end, you get to have a bite of the cake without any hands-on effort. You can also get rewards from the properties you bought without having any hands-on experience with them. That is what investing in real estate online is about.
You can also compare this to the shift in the Gold industry. The conventional way of getting gold is to physically buy and store it, but now, you can simply invest in gold online.
How to Invest in Real Estate Online
Now that you understand what investing in real estate online is, and you are already interested (aside from those who enjoy the physical experience that comes with moving from one property to the other). The next step is deciding how you’d be investing and that is what the next section is about.
There are several ways you can invest in real estate online and one of the popular methods is real estate crowdfunding, among others that will be mentioned as well.
Real Estate Crowdfunding
In traditional real estate investment, there is the Real Estate Investment Group (REIGs) which can be compared to crowdfunding. Real estate crowdfunding is a medium that allows multiple investors to pool their money together to invest in a property or property. If you know mutual funds and how it works, then you should understand this already.
Real estate crowdfunding is a perfect investment plan for those with a full-time job or those who are actively involved in something else, like schooling, and would like to make some extra money from real estate. Crowdfunding comes with a low initial capital which makes them ideal for even beginners, unlike the traditional real estate investment.
Some of the recognized platforms for crowdfunding are CrowdStreet, RealtyMogul, and Fundrise.
Real Estate Investment Funds (REITs)
Investing in real estate through real estate investment funds (REITs) is also another way to invest in real estate online. REITs are more like companies that directly own income-producing real estate such as apartments, office spaces, warehouses, and even shopping malls.
REITs allow you to invest in small amounts, unlike the amount you will invest when you purchase a whole property. You can also spread your investment across several properties, thereby reducing your investment risk across locations and property types.
Similar to how you invest in stocks using stock brokers, you can trade REITs on public stock exchanges, or sometimes non-traded private REITs.
Other Online Investment Methods
Besides crowdfunding and REITs, there are several other methods through which you can invest in real estate online. Just as there is house flipping in the traditional investment in real estate, there is also an online version called Micro-flipping. This is where you buy a “not-too-good” property from a distressed seller and sell it without paying for any fix.
The last option, although there might be more as new methods are emerging, will be the fractional real estate investment. This is made possible by using blockchain technology in real estate. This allows you to invest in real estate with as little as you have, ranging between $50 – $100. You can now use online platforms like RealBlocks.
What is The Best Way to Invest in Real Estate Online?
After all has been said, the big question now is about the best way you can invest in real estate online. Several ways have been mentioned above and choosing the best way depends on several factors such as the type of property you want to invest in, the amount you can invest, etc.
For instance, you should not consider using the fractional investment method when you don’t know how to invest in cryptocurrency. As mentioned above, real estate crowdfunding is more suitable for the working class. Which means you can easily spare some cash to use in investing. For REITs, it can provide you with a more steady income and it is also easy to sell.
Conclusion
The world is increasingly becoming an online village and the real estate sector isn’t left behind. In this digital era, you no longer need to make a down payment or have the burden of property inspection and management before you can invest in real estate. Right from the comfort of your home, you can invest in real estate with several options to select from.
Whether you are a busy professional looking to invest through REITs or you have little cash to invest through crowdfunding or fractional investment, the online space has several means you can explore.
Aside from investing in real estate online, you can find other interesting ways to make money online without investment or even learn some of the highly lucrative tech skills. Investing in real estate online will take a lot of research and carefulness to find the best fit for yourself. Check out the platforms mentioned above, or do further research, and settle on the one that best suits you and your personal budget.
Frequently Asked Questions
Which real estate is best to invest in?
Real estate property to invest in includes residential, commercial, raw land, etc. Out of all these types, the one considered the most is the commercial properties. One of the reasons for that is because of its potential for higher cash flow. People who invest in commercial properties can often experience longer leases, high-income potential, and lower vacancy rates than other types of real estate.
What are the 3 most common investments?
There are many types of investments to choose from these days, either online or physically. Perhaps, the most common of them all will be stocks, real estate, and mutual funds. Other types of investments that you can also consider are cryptocurrency, gold, PPF (Public Provident Fund), Certificate of Deposits, etc.
Are REITs a good investment?
REITs typically provide high dividends with the potential for moderate, long-term capital appreciation. The overall long-term returns of REIT stock are often higher than those of lower-risk bonds and comparable to value stocks.
REITs are also a good investment both for those saving for retirement and for retirees who need a steady income stream to meet their living expenses. REITs’ dividends are so high because they must pay out at least 90% of their taxable profits to shareholders each year. Their dividends are made possible by the consistent flow of agreed-upon rent that their property tenants pay.
