Historically, real estate is an asset that has appreciated in value over time. But as with any investment, there is some level of risk involved.
If you’re new to the world of real estate investing, you may be looking for low-risk opportunities to start out with. GOBankingRates spoke with real estate investing experts to get their picks for the safest investments for beginners — here’s what they chose.
Real Estate Investment Trusts (REITs)
A Real Estate Investment Trust is a way to get involved in real estate investing without having to actually buy property — and it’s generally low risk.
“Some REITS are open to non-accredited investors for as little as $1,000,” said Jamison Manwaring, co-founder and CEO of Neighborhood Ventures. “This is a huge benefit in an industry that is historically dominated by the very wealthy. Though nothing can be guaranteed when investing, typically, experienced REIT managers are well-versed and can assess the value of a property, what it will take to increase it and what it will sell for, giving their investors a generally good idea of what kind of return they can expect.”
REITs can provide a steady income stream as well.
“REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends. This means that investors can receive a steady stream of income from their REIT investments,” Manwaring said.
While REITs are generally “safe” investments, it’s important to note that there is some level of risk involved.
“Of course, like any other investment, REITs are subject to market risk,” Manwaring said. “Value can fluctuate with changes in interest rates, economic conditions and other factors. However, because real estate is a fixed asset, your investments are less susceptible to things like inflation or a bank crisis versus a checking or savings account.”
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