The housing market has seen a rebound and rents have risen and it’s a great moment to think about real estate investment. It’s an excellent way to diversify your portfolio and help protect it from stock market volatility but it’s not the best option for all. When you invest in individual properties or a complete project, you should always make sure that you have adequate funds in reserve and are able handle the possibility of unexpected expenses.
Real estate investment trusts (REITs) are publicly traded companies that manage and own an inventory of real estate assets. Dividends are the principal method they distribute their earnings. They are a good option for investors looking to diversify their portfolios through real estate, but do not have the time or resources to actively manage the properties themselves.
Another popular option for investors is real estate crowdfunding. It connects developers who want to finance commercial projects of a large size with investors looking for attractive returns. These investments can provide better returns than traditional bonds and stocks but they also require more effort and a higher level of liquidity from the investor.
Many homeowners lease their homes or even their entire house as an investment. This type of passive income can be a solid source of revenue however it comes with the risk that you might lose your home to foreclosure or have to deal with expensive repairs. This is a risk you should carefully consider before investing in residential real property.