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How to Invest in Real Estate

Beginner's Guide to Real Estate Investing

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Investing in real estate is a great way to grow your wealth if done responsibly, with conservative financing, and with an understanding of the tax implications. This brief introduction was created as part of our Real Estate Investing Guide and is designed to point out all of the great real estate articles and resources we have available to you on the site.

Comparing Real Estate Investing and Stocks

One of the most common questions we receive is the difference between investing in stocks and real estate. Real Estate vs. Stocks: Which Is Better? is an article that will explain the differences, advantages, and disadvantages, of investing in real estate versus owning stocks and is a great place to start if you are considering adding property to your portfolio.

Real Estate Investing Through REITs

One of the easiest ways to invest in real estate is through a special type of asset known as a REIT (which is short for real estate investment trust). By allowing companies to pay no Federal income tax in exchange for paying out 90% or more of their profits to shareholders as dividends, you can take a small ownership stake in multi-million dollar malls, hotels, parking garages, and much more. These investments can be held in brokerage or retirement accounts. To get started, read Real Estate Investing Through REITs.

The article is broken down into five easy-to-read parts:

  • Part 1: A basic introduction to REITs, benefits, and qualification requirements
  • Part 2: REIT liquidity and how you can use them in your retirement portfolio to invest in real estate
  • Part 3: Equity REITs Including Residential, Retail, Office, and Industrial REITs
  • Part 4: More Equity REITs Including Healthcare, Self Storage, and Hotel REITs
  • Part 5: How to Use REITs to Your Real Estate Investing Advantage, Mortgage REITs, Hybrid REITs, and much more.

Investing in Home Ownership

If you are thinking about buying a home and want to know which investments might be appropriate for you save for a down payment and build your wealth, you may want to read The Best Places to Invest Down Payment Money and The Great Real Estate Myth. The first will tell you about the options available to you when you want to keep your cash safe until you have enough to make a good down payment on your own home. The second will explain the myths often associated with real estate investments, warning you that it may not always work out and that real estate prices do not always go skyward in a steady, clean line.

Risks of Real Estate Investing

Most real estate is bought (and makes an attractive investment) because of the use of debt. One of the biggest dangers for real estate investors is the desire to pay off debt early without maintaining sufficient cash and liquidity to carry them through recessions or higher than average vacancies. To learn how to lower this risk and why it is a real concern for real estate investors, read Why Building Equity at the Expense of Liquidity Can Make You Go Bankrupt.

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