Five Ways to Unlock Wealth Through Real Estate

Real estate offers a number of advantages as an alternative investment, including the opportunity to build wealth using the money of others. Financial institutions will provide the majority of the investment capital in the form of loans. Tenants help service those loans. Buyers will satisfy outstanding financial obligations if liquidation becomes necessary. And, any losses incurred could reduce tax liability. These are among the reasons the experts at Yieldstreet look upon real estate investing as a potentially favorable alternative investment strategy—as well as a robust tool for portfolio diversification. 

Here are five ways to unlock wealth through real estate. 

1. Purchasing a multifamily property and living in it for a while can get an investor started, even while providing a residence at a discounted rate. The rent from the other units can be used to service the loan, as well as cover maintenance and other costs. Living in the property for five years or so usually provides enough time for equity to accrue, the property to be refinanced and the proceeds to be used to acquire another. 

2. Crowdfunding platforms afford investors opportunities to gain control of properties with minimal investments. Pooling capital with other investors enables the participation in larger real estate projects than could potentially be accomplished alone. 

3. Real Estate Investment Trusts (REITS) provide many of the same benefits of crowdfunding while behaving more like traditional investments. Investors purchase shares, just as they would in public stocks and earn dividends. Legally, REITs are required to distribute 90% of their taxable income among investors. This makes an REIT investment a potentially excellent means of generating passive income. They can also serve as useful hedges against inflation, as rents tend to rise in concert with inflation. REITs also free investors of the tasks associated with being landlords. 

4. Joining a real estate syndicate affords investors another opportunity to craft real estate portfolios free of the concerns of being landlords. While there are income and certain additional requirements to meet, investors can gain partial ownership of a diverse array of properties, spread over a variety of types, including residential and commercial holdings. 

5. Buy a Home and Live in It

While this option may lack the glamour associated with the other ways to unlock wealth through real estate listed above, there is much to be said for acquiring a residence and settling in. Long-term appreciation almost always makes owning a home a potentially favorable investment. 

Real Estate as an Alternative Investment

Traditional portfolio asset allocation envisions a 60% public stock and 40% fixed income allocation. However, a more balanced 60/20/20 or 50/30/20 split, incorporating alternative assets, may make an investment portfolio less sensitive to public market short-term swings. Individuals considering real estate as an alternative investment can also benefit from using a retirement calculator for planning. 

Source: Yieldstreet