Investing in real estate without buying property

On Behalf of | Jul 7, 2016 | residential real estate

Florida residents may already be aware of the various ways in which they can build their retirement savings other than through investing in the stock market or purchasing residential real estate for the sole purpose of renting it out. While renting property may reap a profit, there are other strategies whereby people can successfully invest in real estate.

For example, people can buy shares of a real estate investment trust and then add them to their retirement portfolio. A REIT is a publicly traded entity that holds income-producing real estate of all kinds. There are REITs that only focus on large-scale commercial real estate, such as industrial facilities, hotels or shopping malls. Other REITs solely deal in smaller residential real estate developments like condominiums and apartment complexes.

Through this strategy, people can actually invest in commercial or residential real estate without having to actually purchase or finance any property. In addition, when people add REITs to their investment portfolio, they help to lower their risk and volatility. However, unlike stocks and bonds, the income produced by REITs largely depends on profits from real estate sales and a healthy cash flow.

Besides REITs, real estate investment partnerships are additional ways people can successfully invest in real estate. People who choose to invest in such a vehicle should be aware of potential liability issues that could arise, and thus they might benefit from speaking with an experienced real estate attorney first. The partnership usually has a developer or property manager who is responsible for making most decisions, and there should always be a written agreement setting forth the rights and responsibilities of all of the parties.

Source: The Street, “How to Invest in Residential Real Estate Without Becoming a Landlord”, Brad Walker, June 21, 2016