3 Ways to Invest in Real Estate - Ideal REI

Level Up Your Analysis Game

Download the free deal analysis calculator which will help you accurately screen good from bad deals saving you a ton of time.

Rental House

3 Ways to Invest in Real Estate

The three most common ways people invest in real estate are through homeownership, REITs and ETFs, and direct investment.

How to Invest in Real Estate

There are so many different ways to invest in real estate, but these are the 3 most common ways – homeownership, REITs and ETFs, and directly purchasing real estate investment property.

Home Ownership as an Investment

The true costs of owning a home are often forgotten until after closing on the property. Owners should remember they need to spend anywhere from 1-4% of the value of the property on maintenance and upkeep.

Has much lower returns than the stock market. Returns are near 0% once inflation and maintenance are taken into consideration.

REITs and ETFs

Exchange traded real estate funds and REITs are based in real estate but are also listed on the stock exchange. The benefits and problems are related to the regulations required to get listed on the stock market. These regulations are extremely expensive and add to the costs.

Though you technically may own a portion of the real estate, you have absolutely no say in what real estate you buy or how it’s managed. You can only vote with your feet and sell your shares and move on.

Managers can take 10-20% of the money and give you a “normalized profit.” If you get 8% you are happy, but you paid a ton of managers and other people. 8-12% seems good, but not when you know how much they took off the top.

Directly Invest in Real Estate

People are afraid of this because they don’t want to “fix leaky toilets” or any number of other excuses. Who wants to fix toilets? I don’t even think plumbers like to fix them.

The reality is direct investments can be as active or passive as you want them to be. You can actively manage your property, or go a more passive route. So, you can fix toilets if you are hands-on, or you can just hire other people to do it.

The greatest benefit to directly investing in real estate is that you can leverage your returns. Returns can be leveraged into huge returns, often > 20%.

Lastly, you can decide which properties to invest in and which ones to skip. You can also decide how to deal with problems or let someone else figure it out. You have a high degree of control.

About the Author Eric Bowlin

Eric is an investor that achieved financial independence at the age of 30. He started in 2009 with the purchase of his first triplex and now owns over 470 units. He spends his time with his family, growing his businesses, diversifying his income, and teaching others how to achieve financial independence through real estate. Eric has been seen on Forbes, Trulia, WiseBread, TheStreet, and other financial publications.

follow me on:

Get The 6-Figure System!

I started out as a full-time student, over $60,000 in debt, and didn't even have a full-time job (two part-time jobs).

Learn the system I used to create a 6-figure passive income.

  • I love the infographic at the beginning of this post. That’s awesome! And thanks for sharing this great list of ways to invest in real estate. Finally, congrats on not celebrating Labor Day! Once we’ve both dominated financial independence we’ll have to meet up and have a non-Labor Day BBQ. 🙂

  • A very informative article about real estate investment! People who wanted to invest in real estate must learn the basics in order to understand that it is possible to get high revenue from this.
    Aramis Realty recently posted…Essential Property Maintenance TipsMy Profile

  • Antoine says:

    Hello, I wish the infographic was up… 🙁 at the same time, I like the idea of no maintenance investing. Its cleaner and stay sane by knowing that I will receive monthly check regardless… No chasing bad tenants.

  • Sunny Batra says:

    Nice Aritcal Eric, Thank for providing the benefit and drawback of various investment oppurtnity available to invest in real estate.

  • Courtney K says:

    I love the infographic! It is easy to understand and full of good information. I like how you broke it down into the different investments and listed the pros and cons. Thanks for sharing!

  • Tristan Chua says:

    Very nice infographic and of course a very informative post as well in regards to investing in a real estate. Thanks for sharing this and keep up the good work!

  • Hi,
    Nice article!

    There are three ways you can achieve through property investing. These are:

    Capital growth strategy
    Cash-flow strategy
    Renovation

    Thanks

  • shankar22 says:

    Investing in real estate can be challenging. Having precise knowledge, it is essential when you have plans either to buy or investing.

  • Good morning,
    an old trick when have when you have cash, you invest in stock and other financial product and you take a credit to buy a house (in many country, I’m from France, the standard credit are fixed credit.) So it will be very interesting in this case.
    crowdfunding immobilier recently posted…Investir à MetzMy Profile

  • namitha says:

    Very informative article!! You Clearly Listed Pro’s and Con’s of investing opportunities in realestate with the help of Infographics.

  • Just brilliant writing so far regarding investing in real estate! I appreciate this type of writing which post is really helpful for others. Thanks and keep up the great work.

  • Hey Eric

    I benefited a lot from your tips.
    The field of real estate investment is the best way to make money, you can get a wealth of this field, but not that easy, it requires hard work, and renewable plans, widely thought, and most importantly is the deep study before starting in this field.
    anyway, thank you again for sharing your thoughts, keep up the good work.

  • Frank says:

    A real estate agent is one who maintains the link between a buyer and a seller. He has the list of all the properties that are on sale in the area of your choice and he can get the right property deal by creating a mutual benefit for all the respective parties.

  • real estate says:

    Just brilliant writing so far regarding investing in real estate! I appreciate this type of writing which post is really helpful for others. Thanks and keep up the great work.

  • >