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Zeedeed shows: 2022 insights and reports of commercial real estate

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Cuneyt Tasdelen

Real Estate Expert

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For many people, buying a home just wasn’t in the cards this year. There were too few homes for sale that were too expensive to buy.

 

Indeed, home prices have been on a tear, with third-quarter home prices up more than 18% from a year earlier, according to the Federal Housing Financing Agency. And some analysts expect they will continue to rise significantly through 2022.

 

But those who got shut out of buying a home don’t have to miss out on rapidly appreciating real estate values.

 

Investing in real estate has long been the realm of “accredited investors,” a category of typically high-net-worth investors with access to high-risk (and potentially high-reward) investments like private equity real estate funds, hard money loans or real estate syndication in which a group of select investors pools their money to buy properties. But through investment products like mutual funds and ETFs tied to real estate and online crowdfunding platforms, more people are able to access real estate investments.

 

“There are a lot of people who are feeling excluded from the home market right now,” said Ben Miller, co-founder, and CEO of Fundrise, an online real estate investment platform. “Investing in real estate is a way for them to start to understand real estate.”

 

While other alternative investments like cryptocurrency can fluctuate wildly from day to day, real estate can be a reliable long-term growth investment and income generator, he added.

 

Here are some of the ways you can invest in real estate without buying a home or becoming a landlord.

 

Investing in REITs

 

 

Real estate investment trusts own and invest in properties. By putting money into a REIT, investors are given the opportunity to buy shares in commercial real estate portfolios and earn money from income-producing properties without actually buying or managing the property.

 

Pulblicly traded REITs are available to investors directly or through mutual funds and ETFs. Some popular ones are Vanguard Real Estate ETF (VNQ (VNQ)) or iShares U.S. Real Estate ETF (IYR (IYR)).

 

Given the massive increase in home prices, REITs had a banner year in 2021, with investor earnings hitting a record high. The cash flow from the investments for equity REITs were up 40% in the third quarter from a year ago to a record-high $17.4 billion, according to an index from Nareit, a REIT industry group.

 

And there’s still room to run in the real estate market, said Jim Sullivan, BTIG’s REIT analyst.

 

“We continue to see positive signs for the economic recovery headed into 2022,” he said.

 

 

Crowdfunding

 

It used to be that investors needed tens of thousands of dollars to invest in real estate, but minimums have decreased dramatically. Crowdfunding companies, which pool smaller amounts of money from a large group of investors to put toward properties, have been able to get initial investment minimums down to hundreds of dollars. There are even options to invest with just tens of dollars.

 

Fundrise, for example, offers an option that requires a minimum investment of $10. At that level, the investment is entirely in a Flagship Fund, which contains real estate properties around the country ranging from single-family rentals to logistics centers. The company charges an annual advisory fee of 0.15%, with its funds charging an additional annual asset management fee of 0.85%.

 

“Once you invest you can see that you invested in a real asset,” said Miller. “There is a real value, not just market value or cryptocurrency speculation. A lot of people never thought they could own real estate.”

 

 

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