All investors need to find ways to diversify their portfolios and one great way to do exactly that is through real estate investing. Similar to the stock market, there are multiple types of investment vehicles available. It is important for real estate investors to be familiar with their options so they can make the right decision for their needs. There are two broad categories of investment options for investors. The first involves physical investments and the second involves virtual platforms.
Physical Real Estate Investment Options
The first option is to invest in physical real estate. This might include residential properties, commercial options, and land. This can provide a strong return; however, it does require investors to put down a larger down payment. As a result, the barrier to entry can be high. In addition, there are significant ongoing costs. At the same time, for investors who have the money available, there is an opportunity to enjoy a large return.
Crowdfunding Options for Real Estate Investments
The other option comes in the form of crowdfunding platforms. This real estate investment option has a much lower barrier to entry. This means that it does not require the same amount of capital to enter the market. REITs, which are real estate investment trusts, are the most prominent example of this investment vehicle; however, the return might not be as great as physical real estate.
Find the Right Option
These are the two most common categories of real estate investing. Both of them have their advantages and drawbacks. Physical real estate requires more money but can provide a higher return. Crowdfunding platforms have a lower barrier to entry but the upside might not be as high. It is important for everyone looking to diversify their investments to consider the opportunities presented by real estate.