Once up on a time, only the well connected and wealthy were privy to real estate investing. Over the past few decades, however, real estate investment has changed drastically. Now even laypeople can access real estate investment opportunities. Additionally, more residential real estate platforms have become available, making residential real estate investing a great opportunity for many.
Here are some excellent tips on how to get involved in residential real estate investing!
Peer Based Residential Real Estate Investing Options
Peer-to-peer lending platforms are a great option for getting involved in residential real estate investing. Until recently, peer-to-peer lending platforms were only focused on commercial real estate properties.
Of the first firms that offered residential real estate investing options, Fundrise paved the way. Fundrise is attributed for making the call to expand into offering loans for single family homes in 2014 (after a few trials that proved to be successful). Another crowdfunding platform known as SoFi has also become part of mortgage underwriting.
The downside of P2P home loans is that they typically are reserved for loans that are in large amounts and are for borrowers that have excellent credit. This may not be a feasible option for everyone.
Real Estate Investment Trusts
Real estate investment trusts, or REITS, are growing in popularity when it comes to residential real estate investing. A REIT is a firm that develops and owns real estate. You can get involved by purchasing shares in a public REIT. Some REITS focus primarily on commercial real estate while others focus on residential.
Be sure that before you invest in a trust that you know how it is designed and how you will gain value from its holdings. The performance of real estate investment trusts are based on a variety of factors, including profits from properties that are sold as well as cash flow.
Consider Residential Real Estate Investing Partnerships
Real estate investment partnerships are another great way to invest in residential property. Present law requires real estate investment partnerships to be structured in several specific ways, ranging from limited liability partnerships (LLP) to general partnerships, tenant in common projects, or limited liability corporations (LLC). Each structure has its own disadvantage as well as advantage. Because of this, it is important to always dig deeper into the fine print of these opportunities before investing.
It is also important to consider how partners will be selected, how decisions need to be made and removed and so on. You should also request a written agreement that is reviewed by an attorney.