As a busy professional you don’t always have the time to dedicate to your investment portfolio, so you need efficient options that won’t take you away from your day job.
Want to invest in real estate and generate a passive income without having to screen tenants and deal with maintenance issues?
Find out in our complete guide to real estate investing for busy professionals.
Real estate investing for busy professionals
There are plenty of ways that you can invest in real estate, some of which you’ve probably never heard of.
We’ve chosen 7 of the most efficient investment opportunities in real estate for you to consider.
1. Invest in REITs
Real Estate Investment Trusts (REITs), which are a type of company that invest money into real estate. Investors are given the option to purchase REIT shares and divide the ownership of the property. With a REIT, multiple investors benefit from the profit made from selling or renting the property.
REITs allow investors to build a successful portfolio in real estate without the risk and stresses associated with being a property landlord. You can find REITs on the stock exchange, which makes the process of buying and selling them much easier and can be either domestic or commercial properties.
Benefits of investing in a REIT:
Investing in REITs is considered more tax-efficient because they are exempt from paying tax so investors can make more profit.
- Need an investment that you can easily take back your money from? You can do that with an REIT.
- The day-to-day management tasks associated with owning a property can put off some investors. With an REIT, you don’t need to deal with that side.
- The legal costs of buying a house are not applicable to individual investors as they are paid for by the REIT.
- With an REIT, higher value properties become achievable.
2. Invest with other busy professionals
A real estate partnership is made up of a minimum of two investors that contribute money to buy a property together. The property can then either be invested in through renovation and put on the property market or rented to tenants. The rental income is then split between all investors.
There are different avenues to consider when searing for a real estate partner. Family and friends make a good choice of partner, as well as local governments. Basically, you can partner with anyone you trust that want the same end goal for the property. If a partner wants to exit the investment early, other partners may need to contribute the additional funds to pay the investor off.
Benefits of real estate partnerships:
- Divide the workload that can come with property investment between the professionals that you choose to partner with.
- You have complete control over how much money you invest in the property.
- Earn a higher return on your investment compared with other real estate investment opportunities.
3. Explore real estate crowdfunding opportunities
Does diversifying your real estate portfolio and minimizing risk sound like a good option for you?
Real estate crowdfunding can give investors access to larger and more valuable properties. This type of investment is becoming an enticing way to put money into property to either then sent or sell for a profit. Websites are used to attract investors and collect money. Some websites promote buy to let opportunities while others may choose to promote development opportunities. Fees are deducted from the final profit before the remaining money is shared fairly between the investors.
Keep in mind that you won’t be able to access your investment quickly if you need the money back. Most real estate crowdfunding opportunities will have target investment periods of between three and five years.
Benefits of real estate crowdfunding:
- If you don’t have large amounts of money spare, crowdfunding can give you the opportunity to invest in real estate.
- Expand your portfolio and minimise property investment risks with crowdfunding real estate.
- Earn higher profits than property investments such as buy to let.
4. Invest in construction instead
The U.S economy relies on the construction industry as one of its largest contributors. There are more than 733,000 employers and 7 million employees. The industry creates nearly $1.4 trillion every year.
For this reason, investing in the construction side of real estate could be a smart financial move. There are different routes to consider, including:
- Buying stocks in home builders – new builds can move tenants or buyers in straight away, which means you will start seeing a return on your investment quicker. New houses also have lower maintenance costs and an easier buying process, making them more sellable.
- Invest in ETFs – An exchange-traded fund, or ETF, provides investors with the opportunity to buy multiple stocks and bonds. Investors buy shares of ETFs and use the money to invest according to an objective.
- Consider public infrastructure – infrastructure is a crucial part of real estate and can yield high returns on investment for investors.
- Put your money in construction technology – investments in technology for smart buildings are becoming popular because they are being used more and more to build new homes.
Benefits of investing in construction:
- Investing in the construction industry can give a high return on investment because new properties come with a warranty that will increase the resale value of the property.
- Construction is a growing market with no signs of it decreasing, meaning there is plenty of room for new investors.
- The value of your investment in the construction industry will appreciate over time, which makes it a low-risk option to consider.
5. Put your money in real estate notes
Real estate notes are an increasingly popular investment product on the real estate market.
A real estate note is created when a transaction is made between two parties, typically a buyer and a lender. The borrower uses the money to buy a property and becomes the owner of the real estate note, similar to how a mortgage works.
Benefits of real estate notes:
- Investors can expect to receive a 7-9% return on their investment from real estate notes, which is higher than other property investment opportunities.
- You can easily get your money back from real estate notes by selling the property and paying off your loan. Any profit you make is yours.
- You will avoid dealing with property-related maintenance and tenant issues by investing in real estate notes because they are dealt with by the landlord.
6. Consider hiring a property manager
Investors that want exposure to rental real estate without the hassle of property rental and maintenance often hire a property manager or property management company to do the work for them. A property manager oversees the daily operations of a real estate property, ensuring the property is run smoothly and efficiently, and making sure that the needs of the property owners’ are met.
The key to making this an efficient investment opportunity is by investing in properties that provide you with enough cash flow to cover the fees of a property manager and give you a decent size return.
Benefits of hiring a property manager:
- A good property manager will ensure your property is never vacant, maximising your income by reducing the amount of time the property is unoccupied.
- No cash flow issues. Securing payments and chasing late payments from tenants can be difficult, but this is where your property manager will step in and get it sorted on your behalf.
- Having somebody to do the day-to-day management of your properties will give you greater freedom to focus on further investment opportunities and grow your portfolio.
7. Invest in real estate online
More and more companies have started up to make real estate investment for busy professionals possible by solely dealing online. Websites such as Fundrise and Realty Mogul provide great investment opportunities.
Benefits of real estate online:
- Investing in virtual real estate simplifies the process of owning property outside of an investor’s local market.
- Investing in real estate virtually can provide investors with more variety of investment opportunities and help increase potential returns.
- Save valuable time and money by not having to visit properties and attend open house events or auctions.
How residential real estate investing can create passive income
When you don’t have much spare time, your investment options need to be efficient. Thankfully, direct investing is not the only option for investing in real estate and there are plenty of other options for busy professionals. Learning about how real estate investing can work well for you is an important step to take when thinking about investing your money.
The real estate options described in this article will give you plenty to think about. You should never rush an investment, especially if you don’t fully understand where your money is going. Do your own research as well as reading through the information in this article.
Want to know more about investing and home ownership? Visit our personal finance blog for the latest tips and advice on teaching personal finance.