Buying into a variety of investments is a great way to create a successful portfolio, and real estate is a good way to develop that diversification. However, buying real estate, accompanied by ongoing mortgages, insurance, and maintenance, can be too involved, expensive, and risky for many investors. Luckily, there are numerous alternatives for investing in real estate that do not involve buying property and becoming a landlord.

Try real estate-related funds (exchange traded funds and mutual funds)

Options such as exchange-traded funds (ETFs) and real estate mutual funds are good ways to buy into real estate with relatively modest upfront investments. They also allow flexibility for diversifying portfolios and keeping your funds liquid.

An ETF is composed of a group of stocks and bonds joined together into a single fund, and most ETFs are made of various companies that invest in stocks supplied by REITs (real estate investment trusts). They can be traded actively all day. This is a safe, diversified option, and while it's not very lucrative, ETFs can be sold easily and aren't too exposed if an investment doesn’t work out.

Similar to ETFs, a real estate mutual fund can assist in diversifying portfolios in a safe, unexposed way. Mutual funds can be traded on fairly short notice, even though you do have to wait until the end of the day to do so, which makes these investments relatively easy to get in and out of. A couple of downsides in comparison to an ETF is that they have a slightly higher expense ratio, as well as a larger deposit, which can affect the eventual return.

Consider investment trusts

A real estate investment trust, or REIT, is a company that owns or provides financing for real estate properties intended to produce income. An REIT is required to distribute the majority of that income to its shareholders, and so creates an avenue for cash flow for its investors. While real estate ETFs and mutual funds are made up of lots of different REITs, simply investing in an individual REIT is another good option for investing. The important thing is to make sure that you only invest in publicly traded REITs and to stay away from private REITs, since there may be issues with selling your investment as easily.

Help fund a specific real estate-focused company

Many businesses work in and around real estate. These could include more directly involved companies like resorts and commercial developers, or getting involved with businesses that serve the real estate sector. This is different from REITs in that you’ll have to research more to find what you want to invest in. Since this could be a bigger risk, it is important to use caution before buying in and to look into the company’s history. But with confidence, this could be a good option to lead to higher returns as well as gain exposure into a specific kind of real estate investment.

Invest in the homebuilding industry

With limited housing inventory continuing in many areas, investing in homebuilding companies may be a sustainable option slightly outside of usual real estate investing. Instead of focusing on actual properties, you can invest in the builder instead. One option is to invest in a publicly-traded builder. This way, it would be easy to buy and sell stock, providing an easy way out if needed.

Another option would be to invest in a local builder. This may include increased risk on your part, but would mean higher returns, and would mean keeping your investment within your community, which could potentially help create jobs for your local economy. The trick is to be aware of the projected development in the areas that you would be investing in.

Issue hard money loans

This straightforward strategy means handing a direct loan to another real estate investor to do the buying and managing for you. This allows you some investment exposure without becoming a landlord and offers better but limited returns since you wouldn’t be spending as much time on the investment. This strategy is likely best with an investor that you know and trust.

Crowdsource your funding

To secure financing on a project, real estate developers have a few options. They can go through a more traditional lender like a bank, or they could choose a group of individual investors to finance their project. Real estate crowdfunding is a way that individual investors come together to finance a project. However, the way that you can invest depends on the investor’s net worth. If you are an accredited investor with a net worth and income over the amount set by the Securities and Exchange Commission, then you can invest directly in the crowdfunded deals. If you don’t meet those requirements, then you can still invest through an REIT at a lower minimum.

Enlist a property manager

Maybe concerns about funding aren’t holding you back from buying a property but management headaches are. If so, then a good option might be to hire a property manager. This can be especially helpful if your property is far away from where you live. The property manager can also be a buffer between you and your tenants so that you do not have to worry about rents, prospective tenants, minor repairs, or communications at all hours of the day. Instead, you can use that time to focus on your career and locating new property investments.

Since some of the profit will go to paying the property manager, it’s important to buy properties with the capacity to both pay the property manager and allow for a reasonable rate of return.

Do you have more questions about how to invest in real estate in direct and indirect ways? At High Return Real Estate, we provide a straightforward way to accelerate real wealth with real property. Known for our strategic turnkey real estate investing, we consistently produce some of the highest returns in the real estate investing space. We’re here to help you create systematic wealth through real estate and other types of investment.