Investing in Real Estate

Investing in Real Estate

Investment real estate is land and other real property that generates income for its owner instead of a place to live. Learn how to make real estate part of your portfolio.

The Balance’s Guide to Real Estate Investing

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Buying Real Estate vs. Investing in REITs
Frequently Asked Questions
  • How to start in real estate investing?

    The simplest way to start investing in real estate may be to do so indirectly, through a real estate investment trust (REIT), or even an ETF consisting of several REITs. You’ll gain exposure to real estate as an asset, but you won’t have to deal with the day-to-day management. If you want a more direct investment, consider a duplex or small multi-family property. If you live in one of the units you’ll have access to traditional mortgages, and you’ll begin to grow a portfolio of properties.  

  • What is real estate investing?

    Real estate investing covers a broad range of operating, investing, and financial activities all based on making money through the appreciation of real property or via cash flows tied to a property. There are several ways to make money from real estate: asset (property) appreciation, rental cash flows, and ancillary cash flow from products and services related to the property. 

  • What is a REIT?

    REITs are companies that invest in real estate such as single-family homes, apartments, retail locations, hotels, offices, warehouses, or shopping malls. Generally, REITs purchase and invest in properties to add them to their long-term portfolios, producing returns from rental income and appreciation of the properties. REITs must pay out at least 90% of their taxable income to shareholders as dividends. They allow investors to invest “passively,” without the need to actively manage real estate.

  • Can you start investing in real estate with little money?

    Yes, you can, although don’t expect to start out buying and selling hotels. Real estate investment trust (REITs) and real-estate focused ETFs can be an easy, and low cost way to get started in real estate investing. Another option might be to join or form a real estate investment club. You’ll be able to pool resources and share knowledge with other investors just starting out.

Key Terms

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