Strategies To Invest In Real Estate in 2024

Aspasia Athinaiou
January 11, 2024

Table of Contents

Real estate is often a rewarding investment, with the potential for passive income and long-term appreciation. It can also be a smart way to diversify your portfolio beyond the traditional lineup of stocks, bonds, and mutual funds.

While a home might be your first foray into real estate investing, there are numerous other avenues for tapping the market, from rental properties and house flipping to real estate investment trusts (REITs) and online real estate platforms. Here are six investments to consider to diversify your portfolio with real estate. 

Buy a rental property

Buying and leasing out a rental property to short- or long-term tenants is a classic way to invest in real estate. A huge perk of being a landlord is that you can deduct many of the costs associated with the property, including maintenance, repairs, insurance premiums, utilities, administrative fees, mortgage interest, and depreciation. 

Of course, the downside is that rental property can be a time-consuming investment with high start-up costs, You might have to deal with late payments, property damage, and unruly tenants. Still, you can enjoy positive cash flow and long-term appreciation with the right property.

Rent out a room

House hacking can be an excellent way to dabble in real estate investing. The strategy involves renting out part of the home you live in, such as a single room, the basement, an attic, or an accessory dwelling unit (ADU). The start-up costs can be minimal, depending on the condition of the space. And the extra income can help offset your monthly housing expenses while you pay down the mortgage and build equity. 

 A more advanced house hack is to invest in a multifamily property: living in one unit and renting out the rest. Whether renting out a room or half of a duplex, you can find long-term tenants or—where permitted—open the space to short-term rentals using an online platform such as Airbnb. 

Use an online real estate investing platform

Online real estate investing platforms (aka “crowdfunding websites”) are the new kids on the block in the real estate investment world. These platforms match developers with interested investors who pool their capital to fund real estate projects with as little as $500. In exchange, investors get debt or equity in a project, as well as monthly or quarterly distributions if all goes well. While these investments offer higher potential returns than publicly traded REITs, they carry more risk and are generally illiquid, so you may not be able to sell your shares quickly. 

Some platforms are open only to accredited investors, while others, offer opportunities for accredited and nonaccredited investors alike. Investors typically pay an annual management fee (depending on the platform), and other fees may apply. 

Flip a house

House flipping involves buying a discounted property, fixing it up, and selling it for a profit. With the right property you can turn a quicker profit than from managing a property, but it’s not as easy as it looks on TV. To be a successful flipper, you need to see a property’s potential and have a vision for bringing it to life. You also need sufficient cash, a reliable team of contractors, and accurate cost-estimating skills to ensure that you earn a profit. 

Strong project organization skills are also a plus. The sooner you can sell the property, the less you’ll spend on holding costs, including mortgage payments, utilities, property taxes, homeowners’ association (HOA) fees, and insurance. 

Time Stamp: Investing in real estate has plenty of potential

Real estate investments can offer numerous benefits, including stable cash flow, long-term appreciation, portfolio diversification, tax breaks, and the ability to leverage your funds. Of course, there are also drawbacks—among them lack of liquidity, high start-up costs, and the reality that real estate investing can be a long grind. 

Still, it’s helpful to remember that there are multiple ways to invest in real estate, and some options might be a better fit than others. For example, rental property might be a good option if you’re looking for an investment that offers hands-on control and money-saving tax breaks. You might opt for a REIT if you prefer a hands-off approach and a more liquid asset. If you want the best of both worlds, you might invest in rental properties and REITs. After all, you don’t have to pick just one type of investment.

Ultimately, investing in real estate depends on your goals, risk tolerance, and time horizon. Working with a financial advisor and researching your options can help you find an investment that works for you. 

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