Is Real Estate Investing Right For You?

Spend enough time around investors and eventually someone will start talking about real estate.

Maybe it’s your coworker who owns a rental house. Maybe it’s your uncle who somehow manages to bring up property values at every family gathering.

So what’s the deal, is real estate actually a good investment? The short answer is yes. But that doesn’t mean it’s right for everyone.

What do we mean by real estate investing?

When we’re talking about “real estate investing”, we’re not talking about the house you live in. We’re talking about real estate you buy with the goal of making money. That could include:

• Rental homes
• Duplexes
• Apartment buildings
• Shopping centers
• Self-storage facilities
• Farmland
• Timberland

And plenty more. The idea is simple. Buy something that generates income and hopefully grows in value over time.

Why people love real estate

There are a few reasons investors get excited about real estate.

For starters, it can provide income. If you own a rental property, tenants pay rent. If you own shares in certain real estate investments, you might receive dividends or distributions from that investment.

Many investors also like that real estate values tend to move differently than stocks.

And unlike staring at numbers on a screen, real estate feels tangible. You can actually see it. Drive by it. Point at it and say, “I own that.”

There’s something satisfying about owning an investment you can physically touch.

The part people don’t always mention

Real estate isn’t all passive income and beach photos. Sometimes tenants move out, repairs pop up, or a water heater decides to quit over a holiday weekend.

And if you’ve ever owned a rental property, you already know that toilets seem to have an uncanny ability to break at inconvenient times.

Real estate can be a great investment, but it isn’t always as “passive” as people make it sound.

How can you get started?

The good news is that you don’t need millions of dollars to invest in real estate anymore. Here are a few common approaches:

Buying a property yourself

This is the traditional route. You buy a rental property and become the owner.

The upside is that you have more control. The downside is that you have more responsibility. Remember those toilets?

Partnering with other investors

Some people team up with friends, family members, or experienced investors to buy properties together. This can reduce the amount of money required to get started while also spreading out the risk to others in the partnership

REITs (Real Estate Investment Trusts)

One of the easiest ways to invest in real estate.

A REIT is a company that owns income-producing real estate like apartment buildings, shopping centers, warehouses, healthcare facilities, or even data centers.

You can buy shares of many REITs through a brokerage account just like you would buy a stock or ETF.

REITs are popular because they often pay predictable monthly or quarterly income to investors and allow you to invest in real estate without buying a property yourself. You don’t have to worry about finding tenants, fixing leaky roofs, or collecting rent checks.

The tradeoff is that you have less control over the investment than if you owned a property directly.

For many investors, REITs can be a simple way to add real estate to their mix of investments without needing a large amount of money to get started.

Real estate crowdfunding

This is another easy way for real estate beginners to get started. Crowdfunding platforms pool money from lots of investors and use it to buy real estate.

Crowdfunds offer the same or similar benefits that REITs do, they just aren’t bought or sold on the stock market like REITs are.

Why it matters

At Firreo, we’re big believers in diversification.

That’s one reason we like real estate. It can add something different to an investment portfolio compared to stocks and other investments.

But real estate isn’t mandatory. Plenty of people build wealth without ever owning an investment property.

The goal isn’t to own real estate just because everyone else is doing it. The goal is to build a portfolio that fits your life and your goals.

Real estate can be a great tool. It just doesn’t have to be your only tool.