Real estate investment trusts (REITs) are one of the best ways for beginners to invest $1,000. Home hacking involves buying a property and then using it to generate income and cover most or all of the housing costs. Crowdfunding sites also offer investors a certain level of control, as they allow you to choose which properties to invest in. This keeps their dividends high, but it also makes it difficult for REITs to reinvest their profits and build their portfolios.
The old logic that you need to be wealthy to invest in real estate no longer applies. If you don't have a lot of money but want to start investing in real estate, partner with an experienced investor and offer to do whatever is necessary. This means that crowdfunding platforms don't have to distribute more than 90% of their profits to investors every year, and they have more flexibility to reinvest them and continue to grow their portfolios. REITs tend to have an uncomfortable and close correlation with the stock market, so diversifying into the real estate sector is important to prevent a fall in the stock market from derailing your entire portfolio.
Partnering with an experienced real estate investor is a great way to learn the ins and outs and how to avoid common mistakes made by new investors. You have to enter the market somehow, and just like your first job wasn't the most glamorous or highest-paying job you've ever had, your first real estate investment may not be a shiny new luxury apartment building. Arrived Homes acquires properties in some of the country's fastest-growing rental markets and then sells shares to individual investors who simply earn passive income while waiting for the value of the property to appreciate within 5 to 7 years. When investing, the investment time horizon is short, so you don't have to keep your cash for a long period of time.
In addition to being direct property owners, you can also lend money in exchange for real estate for even greater diversification. Just get started, find a mentor, and read everything you can about the investment strategy you choose. Anyone can buy shares directly through their brokerage account, making REITs a simple investment for beginners. Based on your answers, they propose an asset allocation and, if you approve it, they invest your money accordingly. You can also partner with some like-minded individuals and get enough money for the down payment on an investment property.
