Ways To Invest In The Real Estate Market For A Beginner

14 May 2015
 Categories: , Blog


Many people have heard that real estate is a sound investment -- but it can be an intimidating investment type to get into. Do you purchase a residential property and become a landlord? Do you buy a piece of commercial real estate? All investments have a component of risk, which beginners are naturally wary of. But there are some less risky entry points into real estate investing available.

Investing Through Mutual Funds

Mutual funds are often considered to be a less risky method of investing than investing in individual stocks or properties. A mutual fund is an account operated by an investment professional who seeks to make money for those who buy into the fund. As you only need to buy into a small amount of the fund, you can usually invest in a mutual fund with only a few thousand dollars rather than having to put in a significant amount of capital. 

Investing Through Retirement Accounts

If you already have money in your retirement accounts, you can invest it in real estate focused investments. There are many retirement funds that are specifically designed to take advantage of the stable growth that real estate provides. You should always consult with your retirement fund manager or financial adviser before making changes to your retirement account, but many of them will be able to adjust your current investments to target your real estate interests while still keeping you on target for your retirement. 

Investing Through Real Estate Investment Trusts

Real Estate Investment Trusts, known as REITs, are traded on the stock market. A REIT is a business that invests in real estate, so that you don't need to invest in real estate yourself. You profit if the REIT remains stable, just as a stock within any other company. As a REIT is traded as a stock, you can maintain some form of liquidity; you can sell your stocks when you desire, less the transaction fees. Many of the mutual fund options and retirement fund options listed above are involved with REITs, just indirectly. Investing in individual REITs can be just as challenging as investing in the stock market, but may be less risky than purchasing investment property outright.

Naturally, investments should only be made with the help of qualified financial advisers or real estate investment companies and a detailed understanding of the risk involved. There is no form of investment that does not carry with it some risk, which could include the loss of the funds invested.