By Anna Bahney, CNN Business

For many people, buying a home was simply not an option this year. There were too few houses for sale that were too expensive to buy.

Indeed, house prices have been in tears, as house prices in the third quarter rose more than 18% from the previous year, according to the Federal Housing Finance Agency. And some analysts expect them to continue to increase significantly through 2022.

But those who have been excluded from buying a home should not miss the rapid appreciation in real estate values.

Investing in real estate has long been the domain of “accredited investors”, a category of generally wealthy investors with access to high risk (and potentially high return) investments such as private equity real estate funds, loans. real estate syndication in which a group of selected investors pool their money to buy properties. But thanks to investment products like real estate-linked mutual funds and ETFs and online crowdfunding platforms, more people can access real estate investments.

“There are a lot of people who feel left out of the domestic market right now,” said Ben Miller, co-founder and CEO of Fundrise, an online real estate investment platform. “Investing in real estate is a way for them to begin to understand real estate.

While other alternative investments like cryptocurrency can fluctuate wildly from day to day, real estate can be a reliable long-term growth investment and income generator, he added.

Here are some of the ways you can invest in real estate without buying a home or owning it.

Invest in REITs

Real estate investment trusts own and invest in properties. By putting money into a REIT, investors have the opportunity to buy shares in commercial real estate portfolios and earn money from income generating properties without actually buying or managing the property.

Listed REITs are available to investors directly or through mutual funds and ETFs. Some of the most popular are Vanguard Real Estate ETF (VNQ) or iShares US Real Estate ETF (IYR).

Given the massive increase in house prices, REITs had a record year in 2021, with investor income reaching an all time high. According to an index from Nareit, a group in the REIT industry, cash flow from investing in equity REITs increased 40% in the third quarter from a year ago to a record high of 17.4 billions of dollars.

And there is still room in the real estate market, said Jim Sullivan, REIT analyst at BTIG.

“We continue to see positive signs for economic recovery through 2022,” he said.


In the old days, investors needed tens of thousands of dollars to invest in real estate, but the minimums have fallen dramatically. Crowdfunding companies, which pool smaller amounts of money from a large group of investors to invest in properties, have been able to secure minimum initial investments of up to hundreds of dollars. There are even options for investing with just tens of dollars.

Fundrise, for example, has an option that requires a minimum investment of $ 10. At this level, the investment is entirely in a flagship fund, which contains real estate across the country, ranging from single-family home rentals to logistics centers. The company charges an annual advisory fee of 0.15%, with its funds charging an additional annual asset management fee of 0.85%.

“Once you’ve invested, you can see you’ve invested in a real asset,” Miller said. “There is real value, not just market value or cryptocurrency speculation. Many people never thought they could own real estate.

Another way to invest through crowdfunding is real estate debt.

For a minimum investment of $ 5,000, RealtyMogul offers funds focused on growth or income generation from commercial real estate debt, as well as equity in apartment rentals and other residential properties. The fees include an annualized service charge of 0.5% and an annualized asset management fee of 1% based on the total value of the REIT’s equity.

Another company, Yieldstreet, offers an alternative investment fund, the Prism Fund, with access to investments previously reserved for institutional investors. The fund is made up of real estate debt and equity, as well as debt from the art, maritime and legal industries, among others. The objective is to generate returns that can be paid quarterly in cash or reinvested. The minimum investment is $ 500 and the fund charges an annual fee of 0.5% and a management fee of 1%.

Crowdfunding sites offer a way to get decent returns from the real estate market, but probably not as much as buying a property directly, said Blaine Thiederman, certified financial planner and founder of Progress Wealth Management.

“Is this going to give you the same returns that you might receive if you had to invest in your own real estate?” Not likely, ”Thiederman said. “However, I have seen similar returns to the stock market on each of these platforms and sometimes better returns.”

While their simplicity and the favorable income streams of crowdfunding sites are attractive, he said, investors should be aware of the fees and the wait time to recoup their initial investment.

Should we invest?

Since real estate tends to both increase in value and generate income, it’s a good way to diversify your portfolio, said Marcus Blanchard, certified financial planner and founder of Focal Point Financial Planning.

“Stocks typically get most of their return from price appreciation and bonds typically provide most of their return from the interest payments investors receive,” he said. “But real estate sits right in the middle, where returns are more balanced between appreciating prices and stable income.”

But there are some risks, including volatility in the real estate market and the quality of the property, Blanchard said. Larger REITs generally have access to higher quality investments because of their size. Meanwhile, smaller crowdfunding firms are doing their due diligence, but could still invest in lower quality properties, he said.

Most advisers recommend putting only a small portion of your overall investment in real estate.

“I don’t generally recommend that anyone invest more than 10% of their portfolio in real estate, whether through a REIT, investing through an online platform like Fundrise, or in rental properties, as there is so much risk, ”Thiederman said. “Investment strategies have to be profitable because who knows what will happen throughout our lifetimes, but that doesn’t mean we should invest in speculative apartment complexes with 50% of our retirement accounts. “

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