The right way to invest in real estate

Great question. It reminds me of Lucy's line in the Charlie Brown Christmas Special. She complains that she always gets stupid toys or a bike if she only wants real estate.

In an emergency, buying real estate - either real estate or listed stocks that own homes, apartments or commercial buildings - can make sense to diversify your portfolio.

Real estate prices are historically a large long-term investment, even if they can fluctuate sharply in the short term depending on the economic situation.

However, with the Federal Reserve likely to hold interest rates for the remainder of the year, mortgages should remain reasonably affordable for the foreseeable future. The average interest rate on a 30-year fixed-rate mortgage is 4.17%, according to Freddie Mac.
So where should you start when you consider real estate as an investment rather than just a place to live?
As bizarre as it sounds, you must follow the Real Estate Rule

# 1. Place, place, place

"Look at the last recession and you've seen sharp declines in countries like Las Vegas where there was a huge run-up, while places like Austin that did not have a big tip were flat," said Holly Tachovsky, co-founder and CEO of BuildFax, a company with a national real estate database.
Tachovsky also said that any investor who views housing as an investment must do his homework.
"Consider delayed maintenance costs and other hidden costs," she said, noting that damage to roofs, HVAC systems, electrical equipment, or pipelines could make buying a property that initially looks like a bargain a proverbial source of cash.

Houses are not the only investment in real estate

Investors who are considering real estate may also want to consider commercial real estate.
Tore Steen, CEO of CrowdStreet, an online commercial real estate trading platform, said investors should look for places with good job growth.
He said that Nashville, which has a new Amazon Operations Center (AMZN), will employ more than 5,000 employees and a brand new Virgin hotel, and Charlotte, a city that has become a major banking center, is both attractive ,
Brent Hieggelke, CrowdStreet's Chief Marketing Officer, added in an interview with CNN Business that investors should look for real estate types that can hold their own well in a weaker economy.
"What you want is a well-balanced portfolio, with student residences and senior citizen housing growing with demographics that are fairly repressive," he said.

REITs are a cheaper way to invest in real estate

However, if you want to invest in real estate, you need to make sure that you have already saved a large amount of money - whether for a down payment or for investment in real estate funds. For example, CrowdStreet has minimum investments of $ 25,000 for various funds.
Nevertheless, there are cheaper ways to invest in real estate.
Real estate investment trusts, listed companies that own real estate, can also be good bets for conservative investors, as they pay lucrative dividends, which - similar to bonds - can lead to stable returns.
Tachovsky said companies that buy family homes to let them out are a type of REIT that could be useful.
The investment management company Blackstone (BX) has a separately traded REIT called Invitation Homes (INVH), which does so. There is also a company called American Homes 4 Rent (AMH).
So you do not have to be a billionaire (or even millionaire) to become a real estate mogul.
What is the best way to invest, especially in the long term? Are bonds better than stocks? Do you have questions about building wealth? Ask us here and you may be added to a future column.