As you approach retirement, you may be considering investing in real estate to diversify your portfolio and lower your financial stress. But one of the big issues you may face is how exactly to invest in real estate.
You have several options to gain real estate exposure, so don't fret. Check out these 10 choices and see if one of them could work for you.
Steal this billionaire wealth-building technique
The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.
A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.
If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds,see what Masterworks has on offer. (Hurry, they often sell out!)
Own your home
You may be looking for different options to start investing in real estate without considering one that is very close to you: your own home.
You invest in real estate each month when you pay your mortgage to your lender as you get closer to owning it outright without any debt, and in turn, that helps grow your wealth.
One thing you may want to consider is getting free from your debt before you retire by paying off your mortgage. It will give you the ability to own your home outright as a free and clear addition to your portfolio.
Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.
Flip a property
If you have the money to take on a project, you may want to consider buying a property, fixing it up, and then selling it for a profit.
Flipping a property takes planning, and you’ll need to know how to hire contractors to work on the property you buy or do the work yourself.
And remember, the objective is to sell the property for a profit so consider the expenses you’ll have to sink into a property to flip and find a buyer.
Buy a REIT
A REIT, or real estate investment trust, is an easy way to add real estate to your portfolio.
The investment trust allows you to invest in a collection of real estate properties without having to directly buy the properties.
It’s similar to a mutual fund, making it simple to add to your portfolio and diversify your real estate investments without the responsibility of actually caring for the properties.
Get a free stock valued between $5 to $200
Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.
Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.
Let’s say you want to invest $250, as an example.
With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.1
Even better news? Add a Robinhood Gold membership, and you’ll get access to 5.00% APY2on your uninvested cash3and the ability to buy and sell stocks 24 hours a day, 5 days a week.
Open and fund a Robinhood account and earn up to $200 in stock
Invest in a rental property
It may be a better option to become a landlord if you would prefer to own a piece of property that you care for.
You can invest in a home, or you can buy a multi-unit residential building. You could also choose to buy a commercial property and rent it out to different businesses that need the space.
It’s a good idea to check in with a real estate agent or real estate lawyer who is well-versed in rental properties to help you get started and give you an idea of what it takes to own a property.
Use a real estate investing platform
Real estate investing platforms can help you connect with real estate investors that pool money together from many sources to invest it and then send any profits back to the group of investors.
Some websites like Fundrise or RealtyMogul allow you to participate as a small investor. But you’ll want to do your own research on investing platforms and their possible returns before you decide to invest.
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Buy a vacation property
You may live near a place that attracts tourists on a seasonal basis, or you may want a second home to visit and live as a snowbird in retirement.
A second home can be used as a vacation property for yourself but also a vacation property for others if you rent it out to cover some of the costs.
It also may not have to make a profit as long as you can cover the total costs out of your own pocket and then sell it later for extra money.
Work with a group of investors
You’re not alone in wanting to invest in real estate, so consider getting others together to form an investment group.
By investing with a group of investors instead of doing it on your own, you have more buying power to invest in a bigger multi-unit residential property or a larger commercial property.
You can also make decisions together or hire a professional to manage your properties while your group of investors makes money.
Rent your current property
You can make your current properties work for you by renting them out with a variety of options depending on what you can do with your property.
Consider different ideas, such as renting out a barn for events or a large garage for vehicles and motor homes.
You could even rent out your own home if you don’t live there full time and make some extra cash while you’re away.
Start an Airbnb
Airbnbs are a great option if you have a room or space that you want to rent out on a short-term basis.
You can list a room or perhaps a guest house on your property for short-term rental use. You can also buy a property in a touristy area that could be enticing for vacationers who want a short-term rental property.
Take into account issues like amenities nearby and the location of your Airbnb. A space near a hospital or airport, for example, could be a short-term rental for people who work for short periods in the area.
Earn up to a $300 bonus and grow your money with up to 4.20% APY
This powerful combination checking + savings account from SoFi® allows you to earn up to a $300 bonus with direct deposit and grow your money with up to 4.20% APY.4
This is one of the top accounts we’ve seen, and offers like this can be rare. You work hard, and now it’s time to make your money work for you — with SoFi, you can grow your money with hardly any effort!
SoFi has no account or overdraft fees5 and additional FDIC insurance up to $2 million on deposits is available through a seamless network of participating banks.67 Plus, you can receive your paycheck up to 2 days early.8
How to earn up to $300: Sign up and make a direct deposit within the first 25 calendar days of the promotional period, then collect a $300 cash bonus with a direct deposit of $5,000 or more.
SoFi is a Member, FDIC. 7
Open your SoFi account and set up direct deposit
Start a side hustle
Have you considered taking on a side hustle to earn extra money before you retire? Or maybe you want to open your side hustle now and get it up and running so you can earn money from it when you’re retired?
Think about investing in the physical business property you may need to operate your new endeavor by purchasing the space you need to operate your business.
Commercial property could be a great investment that you can sell later to make a profit when you’re ready to cash in and move on.
Bottom line
It’s important to have a diverse portfolio for your retirement, and real estate could be a vital part of your investment plans.
Review your portfolio to see if real estate is right for you, and consider talking to a financial advisor who can help you find the best investments.
The right investments could allow you to retire early or lessen the worry you might struggle financially when you retire.
Masterworks Benefits
- Invest in art like a millionaire for a relatively low cost
- Art investments have outperformed the S&P 500 by over 131% for 26 years
- Purchase shares of artwork by top artists
- Hedge against inflation and diversify your portfolio
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