Last year’s housing market was one for record books, in which inventory was partially strengthened and there was very little mortgage rate. In some parts of the country, housing prices have increased by more than 10 percent on average.
But, it is not only seeing huge growth in major coastal cities. A survey of GoBankingRates revealed that many of the cities with the most development were inland, including: Buffalo, New York (34.6%), Atlanta, Georgia (24.54%), and Cincinnati, Ohio (20.6%).
Keeping this in mind, you might be wondering if you should throw your hat in the ring and invest in real estate – or, if you are too late. You may also be thinking that you should invest in real estate in a traditional sense – such as becoming a landlord.
Now, here’s the good news. Not only is there still a good time to invest in real estate because there is a possibility of more development, but there are more ways to invest in housing without dealing with other minutiae of tenants or landlord’s work.
# 1: Invest in Real Estate ETFs
An exchange-traded fund, also known as ETF, is a stock or bond collection in a single fund. ETFs are similar to index funds and mutual funds, with the fact that they come with the same broad diversification and low cost.
If you are interested in investing in real estate, but want to diversify, investing in real estate projects with ETFs can be a smart move. For example, Vahan VNQ is a real estate ETF investing in shares issued by the Real Estate Investment Trust (REIT), which buys office buildings, hotels and other types of property. IYR is another Real Estate ETF which works similarly since providing targeted target to domestic real estate stock and REIT.
There are lots of other ETFs that come in contact with real estate, so be sure to do your research and consider the possibilities.
# 2: Invest in Real Estate Mutual Funds
Just like you can invest in real estate ETFs, you can also invest in real estate mutual funds too. One of my colleagues, Taylor Shulte of Defin Financial in San Diego, says that she swears by a real estate mutual fund known as DFXX. Why? Because its low cost and track record helps to feel confident about future returns. In addition to the low cost, Schultz says that DFREX’s strategy is supported by decades of academic research of Nobel prize-winning economists.
TIREX is another real estate mutual fund to consider 1.9 billion dollars in assets, comprehensive diversification between real estate holdings and low fees.
# 3: Invest in REITs
In the REIT, consumers invest in the same reason, because of which they invest in real estate ETFs and mutual funds; They want to invest in real estate without holding physical assets. REITs actually allow you to do this, while there is variety in your holdings depending on the type of real estate class.
Chris Ball, Financial Advisor at BuildFinancialMuscle.com, told me that he personally invests in REITs for “non-correlation” with variations and other types of equity. They say that they prefer long term data despite the mood and the real estate market fluctuations.
“It gives me the risk of real estate without being a landlord,” he says. Ball also says that many of his clients agree with that situation and as a result, invest in REIT as part of their portfolio.
It is being said that, I usually suggest that customers stay away from non-traded REITs and instead buy publicly traded REITs instead. The U.S. Securities and Exchange Commission (SEC) recently came out to warn against non-traded REIT, in which due to lack of liquidity, high fees, and lack of value transparency, inappropriate risks arise.
# 4: Invest in a Real Estate Centenary Company
There are many companies that own and manage real estate without the operation of the REIT. The difference is that, you have to dig to find them and they can pay less dividend than REIT.
Real estate focused companies, for example, may include hotels, resort operators, timeshare companies, and commercial real estate developers. Be sure to operate reasonable diligence before buying stocks in individual companies, but this option can be a good option if you want to risk for a specific type of real estate investment and to research historical data, company history and other details. Is the time
# 5: Invest in homebuilding
If you look at Real Estate Market Growth for the last decade or more, it is easy to see that this is the result of a very limited housing inventory. For this reason, many people estimate that the construction of new homes will continue for some decades or more.
In this sense, it is easy to see why investing in the manufacturing side can be smart.