Investing in Real Estate with $0... Is it Possible? - YouTube

So the skyrocketing house prices, as you guys know, in the past year,

they've created a huge, huge jump in unmet demand,

and there are a lot of would be buyers who were saving up for a down payment,

only to realize that it's still not going to be enough.

So if you're still interested in buying real estate, there is a way that

you can without buying the actual property without owning anything.

And we're going to get into that today. Hey, everybody.

Ken MACRA here.

I have over 30 years of real estate investing experience,

and I'm here to share with you how it's done.

But first, if you enjoy our content, please

be sure to click the

Like and Subscribe button so that you'll never miss any of our videos.

So how are people investing in real estate without actually owning any real estate?

It's through real estate investment trusts or REITs.

These are companies that own, operate or finance

income generating real estate people who invest in rates.

They can reap the benefits of inflation and increasing rents.

But there are few things

that you should know about rates to maximize your actual investment.

So rates are popular with investors who want to own a piece of property

without actually owning the entire property.

There are a variety of reasons why this can be appealing.

The obvious appeal is that the buy in is so small.

If you can't actually afford a down payment on a building buying a share

rate, it's a lot more affordable.

The other appeal, of course, is that it's truly passive investing.

If you just want to park your money somewhere and let it grow.

Rates can be an excellent option.

You don't have to worry about the calls

from tenants or scheduling the maintenance visits

or showing the vacant units or any of that fun stuff that property owners have.

Rates tend to have a specific focus of the types of properties that they hold.

There are also many,

many diversified reach that may hold many different types of properties.

These can include apartment communities, single family homes, retail centers,

office space data centers, health care facilities,

hotels, office buildings, self-storage and, of course, warehouse.

The main advantage of arete is

that you are able to buy into one at any dollar amount that you like.

Also, because your investment is tied into real estate,

your dividends will be based in part on what the properties are renting for,

and the rents tend to increase more quickly than inflation.

This chart shows the different types of rates

and their 2019 returns.

So what rich do is they pool their resources

for a multitude of investors who then receive the dividends

from their investment without ever having to actually buy anything.

A lot of treats are publicly traded, and investors can buy and sell shares

in them just like a stock.

It's the easiest way that someone can invest in real estate.

So rates really took off in 2020, as this chart shows,

but they've been around since 1960, when Congress first

allowed the formation of rates.

Here are some strong pros and cons to read.

Also, if you like, I wrote a simple cheat sheet on rates

which you can download at Ken Macrocosm slash rate.

That's Ken Macrocosm Slash read.

OK, so a major advantage of rates is that they offer portfolio diversity.

Rates are a different class of investment than stocks or bonds.

Real estate

often responds to a different market forces than those types of investments.

So if your stocks take a dip,

that doesn't necessarily mean that your rate holdings will.

Another advantage of rise is that they're required by law

to pay at least 90% of their income as dividends.

Next rates pay zero corporate tax, so the rates earnings are passed

directly on to you, or at least 90% of them are.

You're on the hook for paying taxes on your dividends,

but you aren't double taxed on your investment.

The last advantage is the liquidity of investing in a read.

If for some reason you need to pull money out of your investments,

you'll be able to liquidate it quickly.

There are also a few drawbacks that you should be aware of.

one issue is that because rates don't pay a corporate tax

rate, dividends are usually taxed at a higher rate than other investment.

Dividends from rates

are usually taxed at the same rate as a person's ordinary income.

Rates are also pretty sensitive to interest rates.

Rising interest rates can spell trouble for the price of a stock.

Generally, rates are better as a long term investment.

As with most investment, you want to invest for the long term

more than the short term,

even though home prices have been increasing year over year.

That's only one segment of the real estate market.

When contemplating which type of read to buy, be certain

to find out which types of properties they're investing in.

About 80% of rates hold commercial and industrial real estate,

including offices and shopping centers, which have taken a hard

hit during the pandemic.

So the correlation between rising rents and rates profits,

is it always a straight line?

Most experts recommend investing in rates as part of a diverse portfolio.

If your game plan is still to eventually buy property, that's wise advice.

Rates are a good way to capture the rising profits in real.

Without a lot of risk,

but you need to know what types of real estate you're investing in.

Also, if you're shoring up resources to save for a down payment,

be extremely careful about storing your money in a fluctuating asset

if real estate prices were to suddenly drop, for example.

So would your investment.

There's definitely opportunity with REITs.

But just make sure to do your homework first.

Thanks again for watching, guys. We'll see you in the next video.