Alternative Real Estate Investment Options

Real estate investors have many alternative-real-estate-investment-options (e.g., Buy off market property). Lower minimum investments can be made in real estate funds and trusts or online real estate investments. In addition, investors may become lenders or purchase property with tax liens.

Funds and Trusts

Mutual funds trade properties and invest in businesses related to real estate. Investors have little to no control over how mutual funds are managed. Trusts typically invest in commercial properties and allow greater investor control.

Online Investment

Online real estate investment platforms connect investors for a fee. They may offer debt or equity investments and often provide monthly or quarterly returns. Online investing is high risk and does not result in a liquid asset.

Through some platforms, you may need to be an accredited investor and make a higher investment. However, crowdfunding investors make small investments in large projects and are not required to hold accredited investor status.

Lender

Debt investments typically have greater returns than equity, and if you serve as a lender, you become a debt investor and receive interest payments. In addition, debt investors receive their money before equity investors on defaulted notes and bankruptcies.

You may also purchase significantly discounted notes on properties whose owners are having difficulty paying the debt. Those focused on turning a quick profit may foreclose on the note while others may restructure the debt for the debt holder.

Hard money lending is often used by individuals who flip houses. This short term (6-18 months) debt typically has a high interest rate.

Tax Liens

When property owners do not pay their taxes, the government may place a tax lien and claim the property. Investors may purchase these properties at auction for very low prices.

If you seek alternative real estate investment, consider a lower-cost option, such as mutual funds and trusts, online investments, becoming a lender, or purchasing tax liens.