| by Kenneth Chase | 22 comments

8 Real Estate Investing Strategies (without actually managing properties)


– Alright, we all know if
we want to build wealth you can’t do it investing
a hundred bucks a month into a mutual fund. Yes, you’ll build wealth
over the long term, but for those that build
wealth so much more faster, they’re doing things differently. One of the most common
things that you hear is investing into real estate. But, investing to real estate
can be very intimidating and you can lose your butt in a hurry. So how do people do it? How can you invest into
real estate and make money? Well, you can go out and buy properties, and that can make you money, but it can also be very stressful. So today I wanna share with you, what are eight ways that you
can invest into real estate without having to manage
any properties what so ever. Let’s find out what these eight ways are. (upbeat music) Alright, so if you
checked out my other video where I shared the
seven mistakes I learned from my failed real estate investment, you’ll find out that I was a wanna-be real
estate investment person. I was hoping to make some money. Thankfully, I didn’t lose my butt, but I didn’t make anything. But that was a great learning experience. I recognize, like I
said, I wasn’t ready to become a real estate investor, but that’s what led me to the blog and online business
and all that fun stuff. But now, here, present day, I
kinda wanna get back into it. And I recognize that you don’t have to buy a physical property to become a real estate investor. There are options out there that allow you to become a real estate investor
without managing a property and without requiring a
lot of money up front. And I know many of you
are interested in that because you’ve been sharing
that in the comments. You know, that if you
want to build wealth, you gotta do something a
little bit different than stocks, mutual funds, ETFs and many of you want to
invest into real estate. So that’s why I wanna share with you what are these eight
ways that you can become a real estate investor
without managing any property, and lets find out what the
first one is, right now. Alright, the first option you can look at is buying a ETF that
invests into real estate. If you don’t know what ETF is, an ETF is an Exchange Traded Fund. Typically ETFs kinda like mutual funds but instead of being actively managed, they’re trying to track a certain index. The best analogy I can use
to think of what an index is when it comes to investing, is to think of major league baseball. In major league baseball you
have the batting average. What is the average time
someone is going to get a hit when they come up to the plate? Well lets just say that the major league batting average is 240. So that’s what everybody in the entire major leagues is batting. Well if you’re batting
three hundred that means that you’re doing better than the average. So what ETF is doing, is
they are trying to find what is that average,
what is that benchmark, what is that index, and they’re just trying
to track that accordingly. So with a real estate ETF they’re
tracking a certain market. Now this could be the U.S. market, it could be the international market. So it does get a little confusing, but there are options. So a common real estate ETF
that you might have heard of is the Vanguard Real Estate Fund, the symbol of this is V-N-Q. That’s Victor Nancy Q as in Quebec. ♪ Oh Canada ♪ So what this Vanguard real estate ETF invests into are REITS. Otherwise known as real
estate investment trusts. Now I’m gonna have a better
definition of what this is later on in this video. So if you are buying this
Vanguard real estate ETF, you are buying a ton of different stocks, that are investing into
real estate properties. So the only thing you have
to do is just buy the ETF Now the time of this recording, this ETF is trading at about
70 to 75 dollars a share, so you have to have at least 75 bucks if you want to buy one share
of this real estate ETF. So what could you expect to
make on a real estate ETF? So with this Vanguard ETF it has average 6.5% over the last ten years. The dividend yield is 4.8%. Now you have to keep in
mind that back in 2008, 2009 we had a really bad
financial crisis that had a lot to do with the real estate market. You might remember that
if you lived in the California, Arizona,
Nevada, Florida areas. So the real estate index took a hit. That’s a bit of an understatement. So that’s why you’re seeing returns in that six and a half percent range. If you carry that out over 15 to 20 years, you’re looking closer to
eight to nine percent. Alright, so we have a rough idea on what we should expect to
make on a real estate ETF. But what about fees? So first and foremost, you’re gonna have some trading
costs in buying this ETF, because it is like buying a stock. So weather you set that up
with an online brokerage, or maybe there’s someone local that you want to execute these trades for, there’re gonna be some trading
costs associated with that. As far as management
costs, ETFs are gonna be one of the lowest that you’re gonna find. This particular ETF is averaging .12%. Yes that’s .12% on the management cost so that’s what you’re paying annually for Vanguard to manage this ETF for you. Now do please keep in
mind that this is one ETF. This is one real estate ETF. There are dozens, if not
hundreds of options out there. Another one you could look at is IYR. This is the Ishares Real Estate Fund. It’s doing basically the same thing the Vanguard fund is. It’s investing into real
estate investment trust stocks, which we’re gonna talk
about here in a second, average return is just under six percent. It hasn’t been around as
long as the Vanguard fund. Expense ratio is a little higher so the management cost
is .43% compared to .12 so you are paying a little bit more. And that is something to keep in mind when you’re looking at
which ETF you want to buy. Now expenses aren’t gonna be the tell all like that’s not the only thing
you want to focus on, right? Because if you are paying a
little bit more in expenses but you’re getting more
return then who cares. I’ll pay a little bit more to make more. That makes sense. So where would you buy a real estate ETF? Now I mentioned you can go locally and maybe there’s an Edward
Jones in your office. Maybe you could buy it
through a local bank. Me, I’m going to go to an online broker. I’m gonna look at someplace like E*Trade, Ally Financial, TD Ameritrade. All of these are going to
be super easy to set up and they’re gonna charge
you very little if anything to buy some of these ETFs. Now I don’t know the
exact transaction costs but I wouldn’t expect to pay more than $15 to buy one of these shares. And most likely it’s gonna
be less than 10 bucks. All right, let’s look
at option number two. We’re looking at real estate mutual funds. Very similar to ETFs but
the big big difference here is that we’re not tracking an index. So with the real estate mutual fund, or just mutual funds in general, they’re not trying to just
keep up with the average or the benchmark, or the index, what they’re trying to do is do better to outpace what that benchmark is. So we talked a little bit about the major league batting average if the major league average is 240, you know with the ETF
they’re just happy to do 240. With an actively managed
fund, they’re trying to do better than that. They want to bat 280, 300, 350. But with that, you’re
going to get greater costs associated with that. Now with actually managed mutual funds you can see it any where from 1%, some of the international
funds are gonna be as higher as 1.5 sometimes 2%. Now one of the mutual funds that I found that is a real estate mutual fund, this one is ran by Fidelity. The symbol on this fund is F-S-R-E-X. This is the Fidelity Securities
Real Estate Income Fund. Once again, like an
ETF, this Fidelity fund is investing into real
estate investment trusts. So these are companies
that are buying different real estate holdings and
we’re gonna talk about that in the next point if you’re
not really quite sure what REIT is yet. But you’re going to soon know. (whispering) Just be patient. Be patient, it’s coming. So the return on this fund is comparable to the first two ETFs that we talked about but the big difference is the cost. Where the first ETF was .12%. The other one was .4 something percent. This fidelity fund is .63%. So you can see we’re
starting to get higher on our fees that’s something
that we want to watch. Another real estate mutual fund that I looked at had an
expense ratio of 1.12%. So this is 1% greater
than the Vanguard ETF that we looked at in the beginning. Now once again, I don’t
mind paying one percent more but I better be getting at least one percent more in
return if not two percent or three percent. So you just want to be careful because a lot of times the ETFs
and especially mutual funds are just gonna crank
up those expense ratios and they’re going just
to take all your return and you want to make some money. I want to make some money so don’t pay them more than you have to. Now with a mutual fund, like
this Fidelity mutual fund, you’re probably gonna
have to open up an account directly with Fidelity to buy this fund. Now once again Fidelity
does not corner the market on all real estate mutual funds. Just like ETFs, there
are a ton of options. And mostly the options you
can open up an online broker like we talked about
TD Ameritrade, E*Trade, Allied Financial to buy these
real estate mutual funds. If you’re not sure which
are the best ones to get, you know what I did, I just Googled best real estate mutual funds and I found a list on US News that breaks down all the
different real estate mutual funds that you can buy. So check out that list if you’re looking for some good recommendations. But just keep in mind that
I didn’t recommend this I got to kind of say that
because I’m a financial planner and these are not my recommendations. These are just recommendations
if you want to look at from US News for some good ideas. Don’t forget that please. Thank you. All right, number three
and I’ve already talked about this a few times and you’re probably still
scratching your head wondering what in the
world is he talking about? What is a REIT? What is a Real Estate Investment Trust? So what a real estate investment trust is, this is a company that
specializes in real estate. And this could be across the board. Maybe it’s shopping centers. Maybe it’s malls. Maybe it’s hospitals. Maybe it’s home construction. All we’re looking for is a company that specializes in real estate. But just in case I
butchered that explanation on what a REIT is, let me give you the Investopedia definition. So basically you know timberlands, what is that, like the boots? I used to wear some Timerlands. ♪ Timberland. ♪ So that’s kind of a general
explanation of what a REIT is. But there’re also some certain criteria that a company has to
do to qualify as a REIT. So this is what you have
to look for for a REIT. And this is why it’s attractive
to a lot of investors. So to be classified as a REIT,
you have to do the following. The company has to invest
at least 75% of total assets in real estate assets. They also have to derive at
least 75% of gross income from property rent or mortgage interest. Also they have to have a minimum
of a hundred shareholders after the first year of beginning. The fourth thing is that they have to have no more than 50% of shares held by five or fewer individuals. And the last one, and this
is the most attractive one for investors, but they
have to pay at least 90% of taxable income as
shareholder dividends. So that’s why when you look at REITs, they’re typically gonna have
an amazing dividend yield. That’s why you saw the
Vanguard ETF paying the 4.8% on its dividend yield. Now with the actual REIT stocks, you’re gonna see typically
higher than that. You’re gonna see 5%, sometimes as high as 7, 8 sometimes even 9%. More aggressive ones I’ve
seen them in double digits. Now keep in mind if you’re
seeing a higher dividend yield, you’re gonna see a lot of volatility, a lot of a major roller coaster
ride in the stock prices to get that higher yield
typically means higher risk. So just be prepared. That means you better
buckle your seatbelt. Hold on baby, hold on. All right so we talked about what the ETFs and the mutual funds how
they are buying REITS. So these are companies that
specialize into real estate. So you can buy the ETFs or
you can buy the mutual funds or you can actually buy the stock itself, or buy the company. Now, once again, there
are hundreds of different, of stocks or companies that
are classified as a REIT. Just to give you an example
one is KIMCO Realty. The symbol is K-I-M. Short for Kim. That’s a good name. I like Kim, it’s easy to remember. As I mentioned previously, a
real estate investment trust company can invest in
different types of real estate. So what KIMCO Realty focuses
on is shopping centers. So if you’ve ever been
to a shopping center, had a Starbucks, or a Panera
Bread, or any type of, like a Dunkin Donuts,
most likely KIMCO Realty might own that strip mall. So that’s what they focus on. And there are tons of other different type of real estate investment trust companies that you can invest to as well. All right, number four. So we talked about REITs, and maybe for some reason you don’t want to invest into REITs. Maybe they’re too scary
for you, too risky. You don’t like getting
that dividend yield. You don’t like the volatility
of the stock price. Another option you have is investing into companies that
maybe sell real estate. So one example of that is RE/MAX. RE/MAX is a company that
helps you sell your house or helps you buy your new
house if you’re trying to move. Or maybe you have a commercial property that you need to sell. So companies like RE/MAX are another way that you can invest into real estate without managing any property. All right number five. We’re looking at companies that are not managing
real estate properties. We’re not looking at companies are helping selling your home or buying your home. We’re looking at companies
that are building new homes. So one of the coolest
things that we’ve noticed once we moved to Nashville is that there is construction everywhere. Even in the subdivision that we live in, I mean there are building
like four or five houses on our street right now. And they have like 50 more
lots that they’re working on. And this is pretty well
true throughout Nashville if you drive around. Now one of the companies that I’ve noticed that has their sign on the
Interstate is Pulte Homes. So with Pulte Homes, and I
might be mispronouncing that. I apologize Pulte, Pulte,
Pulte, Pulte, whatever. So with Pulte Homes, they
focus on new construction. They’re based out of Atlanta, Georgia. So if you live in the southeast, you might have seen their signs. You might be living in one of their homes. So if you want to get
involved in new construction and new development in real estate, then investing in a company like Pulte is going to check the box on that. Now Pulte Homes is one
of a hundred different home construction companies
that are operating across the US. So just keep that in mind. Do your research and make sure that you know what you’re
getting your money into. (whispering) Oh my gosh,
I need to take a break. Man that’s a lot of talking. Glad you stuck around though cause the next three are my most favorite. (swallowing) Ah, refreshing. All right the first
five that I’ve mentioned don’t really require a lot
of money to get started. You know buying an ETF for 75 bucks share, buying a stock for less than a hundred, you can do that. The next two options require
a little bit more money up front if you want to get started. The next one though is actually a cool one that I will do, I plan to do. A good friend of mine pulled this off. So what this is is buying
a real estate property, so buying a home, buying
an apartment complex, but not having to actually manage it because you are hiring a property manager to take care of it for you. So this one not only
requires some upfront capital but also requires some good connections. So I’m gonna share a quick story. A good friend of mine, his name is Chris. He lives up in Canada. He does visit the US. He’s a musician so he travels a lot and he got connected with a realtor that lives close to me. And this realtor also focuses
on investment properties and helps other people that are interested in real estate investment properties. So my buddy Chris who lives in Canada gets connected with a realtor here in the Nashville area
and they find a property in Clarksville, Tennessee which is about an hour north of us. He puts in an offer, buys
a house and gets accepted and now he owns this piece of property. And the realtor friend hooks him up with a property manager to
take care of everything. So the property manager takes
care of collecting the rent, making sure everything gets
fixed that needs to get fixed. And my buddy Chris doesn’t
have to do anything. And because his other
businesses are doing so well, he’s gonna pay this property off like in three years or less. Which is awesome. So just wrap your head around that. Chris lives in Canada,
buys a piece of property here in Tennessee, and now
he’s gonna have that paid off in less than three years. And doesn’t have to do anything and he’s gonna be
collecting the rent checks. Can we just all agree
that Chris is a baller? Holler. But the only way that
Chris was able to do that because he got connected, in this case, with a realtor that hooked him up. And these possibilities, these options, are out there but you have to make the right connections. So with my buddy Chris, he’s a musician. The realtor friend, he’s also a musician. So that’s how they got connected. And I’m supposed to have
lunch with this guy here soon so I’ll let you know how that works. But my buddy Chris isn’t the only one that I have encountered
that has pulled this off. But it does require some money. Now he had to come up with some money to put the down payment on, and once again he had to
have that right connection to be able to find that property. Because he’s not gonna
be finding properties in Tennessee when he’s living in Canada but he had the right
contact to make it happen. All right number seven
is one that I can say that I have invested into. And this is a private real estate note. So similar to my buddy Chris, you know you have to have a good contact to make this happen. So before I moved to Tennessee, I had a good friend of mine that was a real estate
investor and he did it all. He flipped houses. He rented them out. I mean he did everything. What he also started was a…basically like a private real estate fund. So what he was looking for
were investors like myself to give him money and then he would go out and buy these properties
and either flip them or rent them and that
all went into a big pool. So the attraction for me was I was gonna get a good dividend yield. Paying me 7% interest. I did have a piece of the
property that I bought so I had to sign the paperwork
so if something happened I would get the house. So there wasn’t like a risk in
losing all of my money there. So that was a good thing. Like I said for this one to work, you got to have that connection. You got to have a realtor. You got to have a buddy
that’s a real estate investor to make it happen but it
can be an attractive thing because I’m just sitting back
and collecting the dividends. All right, we’re on to the last one. And this one is my favorite because it’s probably
gonna be the easiest one and I think you’re gonna like it too. So imagine being able to
invest into real estate and never have to leave your home. You can be chilling out in your pajamas on your laptop and you can get started for as little as $500. So what I’m talking about here is online real estate options. And my most favorite
right now is Fundrise. So Fundrise is an online platform similar to like Lending
Cloud, peer-to-peer lending, but we’re not investing into notes or we’re not loaning anybody money, what we are doing is pooling our money with other real estate investors all across the US that, like you and I, want to make money in real estate. That we recognize that you can make money in real estate. That a lot of wealthy people
make money in real estate. But we don’t want to manage properties. We don’t want to go out
there and drive around and try to find a good investment because we could lose our butt. So with Fundrise, they are a private real estate
investment trust company. So we talked a little bit about
the publicly traded REITs. So with a company stock with
a publicly traded stock, they have to report all their numbers. They have to report everything to the SEC so everybody knows what
they are buying and selling. Now there are some good things about that but I think we could both agree that the people that make a lot of money the ones that are super wealthy they’re not sharing all that information with the public. You know, they’re go out and finding those private deals, private equity, private real estate deals and that’s how they’re making money. So with Fundrise they are a private REIT. And they invested all over the country. You can do east coast, west coast, or the heartland, right in the mid west. And the best part about Fundrise is that it doesn’t take
a lot to get started. You could open an account with $500. Now they’re not the only online real estate investment
company that’s out there. There are other competition
like RealtyShares or Rich Uncles but what
I love about Fundrise is that you don’t have to
be an accredited investor to open an account. And if you don’t know what
an accredited investor is, than most likely that
doesn’t apply to you. But basically just says
that you can’t invest with the other companies
if you haven’t shown that you have a network of
at least one million dollars or making $250,000 per year. I’m not sure if my details are right on the accredited investor but I think you get the gist. I was so excited about Fundrise that I had to open an account for myself. Check out my video review where I show you the
behind the scenes look at me opening up my first Fundrise account and also all the things you need to know bout Fundrise and how you make money, how much they charge, and how
much you can expect to make. I mean come on, if we can
invest into real estate and not have to leave our
house that’s pretty legit. But I’m curious, have you ever considered investing to real estate? Have you tried like me and maybe had a real estate investment
that didn’t quite work out? Please share in the comments below. And if you are interested in
trying any of these strategies I want to know which one
appealed to you the most. Is it the real estate investment trust? Is it ETFs? Is it mutual funds? Is it Fundrise? Is it one of these online options that allows you to become
a real estate investor without leaving your
bedroom or your living room? That’s pretty legit. All right if you liked this video, you know what to do. Give me a like. And if you haven’t subscribed,
be sure to subscribe and hit that notification bell so that you know when
the next video is coming because guess what? It’s coming whether you like it or not. This is Jeff Rose reminding you that it’s your money, your life, and only you can make it awesome. That’s right. Peace out, take care. The symbol in this one is F-R-S-E-X nope, that’s not it that’s FR sex. The symbol on this fund
is FR…I really really want to spell sex right now apparently. Dear Lord, oh my gosh. Duh, just, duh, duh, just do that again.

22 Comments

Aremac Photography

Oct 10, 2018, 8:06 pm Reply

Great Video!

Devin Broussard

Oct 10, 2018, 12:39 pm Reply

Fundrise peaks my interest, but how do u get paid and collect ur dividends? I dont wanna put 500 dollars in something and have to wait 10 years for a pay out. Like u said the idea is to get the extra income now.

L B 1993brownsuga

Oct 10, 2018, 5:06 pm Reply

I opened my REIT via ETF today

Christopher Ruloff

Oct 10, 2018, 5:36 pm Reply

where´s your video opening the fundrise account?

POGI DONUT

Nov 11, 2018, 6:41 pm Reply

I need to do this

Aremac Photography

Nov 11, 2018, 9:13 am Reply

Great Video!

Jo S

Dec 12, 2018, 10:14 am Reply

Good video, definately peaked my interest.

Hey Herc

Dec 12, 2018, 1:08 am Reply

SAY YOU HAVE $400,000 TO INVEST____HOW MUCH WOULD YOU INVEST INTO FUNDRISE?____IS $200,000 TOO MUCH RISK?

Lachhab Regragui

Dec 12, 2018, 11:33 am Reply

What do you think about lumentrades and zackstrade brokers for international investors?

maxjoey sirrock

Dec 12, 2018, 10:43 pm Reply

like it and join fund rise ,lending club trying them both but my lending club so far at a plus

Cache Moola

Jan 1, 2019, 6:01 am Reply

Before investing fundrise please check out graham stephans channel about fundrise.

Scorpion

Jan 1, 2019, 3:24 am Reply

Are these percentage fees a one time payment type of thing? Or do you have to pay into them every year.

John Kimbrough

Jan 1, 2019, 3:01 am Reply

What site do you use to get your info?

G Mell Talk

Jan 1, 2019, 9:47 pm Reply

also m1 finance

G Mell Talk

Jan 1, 2019, 10:24 pm Reply

im with fundrise

Hans Gruber

Feb 2, 2019, 6:31 am Reply

Graham Stephan has a great in-depth review of Fundrise, there are pros and cons that you should consider before jumping into that it.

Sam Ann

Feb 2, 2019, 8:29 am Reply

Do the REAL real estate. You won't get wealthy having someone else to manage your investments.

Paul Argueta

Mar 3, 2019, 9:40 pm Reply

Great information. The key is executing and taking action. Too many people watch and do little to nothing with the information.

Gateway 17

Mar 3, 2019, 6:53 am Reply

Super video!! 👍

Darryl chambers

May 5, 2019, 7:53 pm Reply

Hi

Darryl chambers

May 5, 2019, 7:54 pm Reply

What about tax liens?

Raw vegan Pam

Jul 7, 2019, 11:16 am Reply

Can you invest through Fundrise from Australia or do you need to be a US citizen?

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