4 Ways to Invest in Real Estate Without Becoming a Landlord

Investing in real estate has been a significant part of my financial journey, and for good reason. Real estate offers tangible assets that can appreciate over time, providing a sense of security. It’s a great complement to stock market investments, offering diversification and long-term growth. However, the idea of becoming a landlord isn’t appealing to everyone, and I totally understand why. Managing properties comes with challenges like maintenance, tenant issues, and unexpected repairs.

But here’s the good news: you don’t have to be a landlord to profit from real estate. There are plenty of ways to invest in real estate without dealing with the headaches of owning and managing property. Here are four methods to consider.

1. Fundrise: Crowdsourced Real Estate Investing

Fundrise is one of my favorite ways to invest in real estate, and it’s simple enough for anyone to get started. This platform allows you to pool your money with other investors to purchase shares of various real estate projects, such as residential or commercial properties. It’s a great option for diversifying your investments while avoiding the responsibilities of property management.

What makes Fundrise so attractive is how low the barrier to entry is. You can start investing with as little as $500, which makes it accessible for many people. The platform handles all the logistics, so you just sit back and watch your investment grow.

2. PeerStreet: Invest in Real Estate Loans

If you’re interested in real estate investing but don’t want to deal with the property itself, PeerStreet offers a unique option. PeerStreet allows you to invest in real estate-backed loans rather than physical properties. Essentially, you’re investing in the debt side of real estate, which means you’re providing funding for loans that help finance real estate deals.

The minimum investment on PeerStreet is $1,000 per loan, and you must be an accredited investor to participate. While this option isn’t available to everyone, it’s a great way to diversify your portfolio if you meet the requirements.

3. REITs: Real Estate Investment Trusts

Real Estate Investment Trusts (REITs) are another popular option for real estate investment. These companies own and operate income-producing properties, such as apartment buildings, office spaces, and shopping centers. When you invest in a REIT, you’re purchasing shares of the company, not specific properties.

REITs are often publicly traded, making them a liquid asset you can buy and sell easily, much like stocks. Additionally, you can invest in a REIT ETF (Exchange Traded Fund) to diversify even further, which allows you to invest in multiple REITs at once with low fees. This can be a solid way to gain exposure to the real estate market without the complexities of individual property ownership.

4. Hire a Property Manager

If you still want to own physical real estate but don’t want to deal with managing it yourself, consider hiring a property manager. Property managers handle the day-to-day responsibilities of running rental properties, including screening tenants, collecting rent, dealing with repairs, and handling complaints.

While this option requires a larger upfront investment to purchase the property, it removes the hassle of managing it yourself. Property managers typically take a percentage of the rental income (usually around 7%), but in exchange, they handle everything, allowing you to enjoy the benefits of real estate ownership without the stress.

Final Thoughts

Real estate investing can be a great way to build wealth, but it’s not always necessary to become a landlord to reap the rewards. Whether you choose a platform like Fundrise, invest in real estate-backed loans through PeerStreet, buy shares in a REIT, or hire a property manager to handle your rental, there are plenty of ways to get started without the headaches of traditional property ownership.

If you’ve been hesitant about diving into real estate, I encourage you to explore one of these options. With the right strategy, you can enjoy the benefits of real estate investing while minimizing the challenges. Happy investing!