How Do You Invest in Real Estate?

If you haven’t made a down payment on a new home yet, investing in real estate can be an ideal way to build a portfolio. Although you will be responsible for maintaining the property and dealing with tenants, this method can be a great way to get started. Before investing in a new property, make sure that you save enough money to cover the down payment. Here are some tips to get started in real estate.

Passive real estate investing

Passive real estate investing offers the opportunity to invest without the headache of a constant stream of work and upkeep. Passive real estate investing requires little time management, and no physical labor like collecting rent. It is also easier to diversify your investments, and can help you take advantage of new opportunities throughout the country. The decision to pursue either type of investing depends on your goals and personal circumstances. But, either way, there are numerous advantages.


The downside of investing in REITs is that they don’t offer a high growth rate, so you’re unlikely to see your money grow very fast. Because most REITs pay out their profits as dividends, they’re limited in the amount of money they can reinvest in the business. That makes REITs their own worst enemy, and it makes sense to invest in real estate in a tax-advantaged account if possible. Also, since REITs tend to pay a high dividend, you should invest in an IRA to defer taxes on dividends. Mutual funds and ETFs can invest in a variety of REITs and provide immediate diversification. Mutual funds also allow for less legwork and are available in many brokerages.


Many experts advise against using debt to fund an unsustainable lifestyle, but HELOCs can be a smart strategy if used wisely. For instance, you can use HELOC funds for renovations to your home, or to purchase a rental property with a down payment. This money can be considered an investment, and it is easy to access funding in this way. If you’re planning to invest in real estate, HELOCs are a viable option.

Individual properties

When deciding what type of investment property to buy, you may be wondering how to invest in individual properties. Residential real estate is the most common type of investment property.

It’s usually purchased with a mortgage, with monthly payments gradually building equity. Investment properties in a hot neighborhood can sell for a substantial profit and let you cash in on your equity over time. However, the average annual return on investment for primary residences is lower than you might expect. Over the period from 1994 to 2019, homes increased in value by 3.9% annually.


If you’re wondering how to invest in groundfloor real estate, you’ve come to the right place. This platform offers an automated investment option that doesn’t require any fees and allows unaccredited investors to participate. Unlike traditional investments, you don’t own the properties you purchase with Groundfloor loans. Instead, you earn interest on the loan, which remains the same even as property values increase. Groundfloor’s loan investments have the same minimum investment of $10, and investors can start with as little as $10.