Invest in real estate without buying property
According to Mark Cuban, a $25,000 down payment credit from Harris breaks down to about $176 in monthly savings for the buyer. While it’s not a massive amount of money, it’s a decent boost considering there’s currently no first-time homebuyer credit for Americans.
It still doesn’t fix the ever-booming cost of property and soaring mortgage rates, though.
Rising home prices, particularly throughout the Covid-19 pandemic, have locked out the typical first-time homebuyer. The median home price soared from $380,000 in 2020, to $501,700 as of July of this year. And while a 30-year fixed mortgage rate was around 2.7% in 2020, the rate now hovers at around 6.2%.
Accessing the U.S. housing market
However, aside from buying a property outright, there are plenty of alternative ways to invest in real estate. And none of these methods would require that you wait to see whether tax credit or policy changes are implemented.
Cityfunds offers a unique way to invest in fractional shares of home equity, across some of the nation’s hottest housing markets – like Miami, where home prices are up nearly 20% this year.
The company offers an opportunity for homeowners to tap into the wealth they've built from their property, while offering investors a chance to invest in real estate without directly buying property. Cityfunds can help you access the more than $20 trillion of homeowner equity sitting untapped across major U.S. metros including Dallas, Los Angeles, Nashville and Denver.
Here’s how it works: Homeowners can sell a fraction of their home equity to a Cityfund for cash, without taking on new debt or adding monthly payments. This enables homeowners to cash out some of their equity, and prospective investors to access that equity for themselves through Cityfunds.
So you can invest in the housing market your favorite city for as little as $500.
Tap into commercial real estate
CBRE, the world’s biggest commercial real estate firm, anticipates a boost to commercial real estate activity and values. They’re expecting a 15-20% increase in transactions. And although the national office market has a 19% vacancy rate, they point to a pickup in office market leasing.
These are promising signs for the market’s growth in the coming years, and you don’t need to be a real estate tycoon to leverage the commercial market’s opportunities.
First National Realty Partners (FNRP) provides access to high-quality commercial real estate properties leased by major essential-needs retailers like Walmart and Whole Foods. The commercial real estate sector can often provide stability during economic downturns, which means you can add stability and security to your portfolio.
As with all indirect real estate investments, the beauty is, you don’t have to worry about any of the admin or logistics.
As a private equity firm, FNRP acts as the deal leader, providing expertise, doing the legwork and streamlining the process, while investors can passively collect distribution income.
You can engage with experts, explore available deals and easily make an allocation, all in one personalized secure portal.
Rental market opportunities
The U.S. rental market is also booming, driven by a classic economic case of rising demand and limited supply. The Federal Reserve even declared the rental market was the ‘biggest stumbling block’ in taming U.S. inflation.
As of this March, rent is now growing at around 5.5% year-over-year. It can be a lucrative market if you’re able to buy an investment property to rent, but it’s a tough investment if you’re already trying to keep up with your own rising rent or mortgage rates, too.
Being a fractional investor in shares of rental homes and vacation properties can help you access real estate at a fraction of the cost.
For instance, Arrived is backed by world-class investors including Jeff Bezos and its platform allows you to get your foot into the real estate market without needing to secure a mortgage or take on the responsibilities of being a landlord.
Arrived allows you to browse through their curated selection of homes, each vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy and start investing with as little as $100.
Invest in REITs and real estate ETFs
Beyond having opinions on Harris’s proposed policy, Cuban’s also opinionated when it comes to investing strategies. He cautions that, when it comes to investing, avoiding hefty fees is key to making healthy returns.
So if you’re investing in REITs or ETFs, giving you access to the real estate market through the stock market, you’ll want to ensure you aren’t getting charged unreasonable transaction fees by brokers, or outsized management fees by the asset managers.
Public offers a simple and convenient way to invest in real estate without owning physical property. Its platform provides commission-free access to real estate investment trusts (REITs) and real estate exchange-traded funds (ETFs), including, for example, the Vanguard Real Estate ETF (VNQ) which soared nearly 28% this year.
Public not only offers commission-free trading but also provides a high-yield account where you can park your cash between investments. Public also has social features, enabling users to follow and learn from other investors, share ideas, and stay updated on market trends with real-time insights — kind of like its own internal Reddit community.
Keeping in mind Cuban’s advice on fees, VNQ has management charges which are below their benchmarked competitors, sitting at 0.13%. Meanwhile, the average management fee for REIT ETFs is 0.43%. Funds like VNQ offer diversified exposure to different types of real estate assets, including residential, commercial, and industrial properties. Think of them as a basket of all sorts of properties in plenty of different geographies.
You also won’t pay any extra fees with Robinhood, making it a cost-effective way to add real estate in your portfolio.
But as with any type of investment, you want to make sure you’ve got the right strategy and research behind you.
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With the right tools at your disposal, whether or not Harris enacts her policy, real estate investing can be within reach.
