Have you ever dreamed of generating wealth through investing in real estate but thought it was out of reach? Think again.
While most people don’t have millions of dollars to purchase a portfolio of investment properties all by themselves, alternative options open the door to these deals for ordinary folks. The following innovative approaches can help people from all backgrounds get into the real estate market and start reaping the rewards.
Crowdfunding Real-Estate Investments
The first way to get on the real-estate investment train is to join forces with others. Real Estate Investment Trusts (REITs), like two funds under RADD Companies, work like mutual funds. People can buy into these programs, and experts invest the money in real estate projects.
“REITs are a great way to get into real-estate investing without having to cover the entire cost of projects yourself,” says Dutch Mendenhall, founder of RADD Companies. “You also don’t have to do a ton of research and vet any projects yourself. For many, this is an attractive way to develop a new revenue stream while adding diversity to their portfolio.”
The other advantage of REITs is that their expert managers can have the knowledge and expertise to make money under different market conditions. “The opportunities change given what’s happening in the economy, but make no mistake — they’re still there,” Mendenhall says.
Another novel way to derive value from real estate is to cash in on your unused land.
Trading Unused Land for Cash
California has recently passed two pieces of legislation revitalizing the state’s real estate industry. The first law, SB9, permits homeowners to subdivide and sell part of their backyard to enable the creation of a new lot where new single-family homes or duplexes can be built. The second, AB1033, allows homeowners to subdivide their yards, build an Accessory Dwelling Unit (ADU) on the new lot, and sell it as well.
Taken together, these two new laws allow homeowners to monetize their unused land in whole new ways. “This unlocks value that zoning has kept trapped for the last 80 to 100 years,” says Matt Lucido, Founder and CEO of Yardsworth, a company that pays homeowners for their empty yard space and turns it into new housing.
To be sure, filing the paperwork, paying the necessary fees, and constructing new buildings — not to mention renting or selling them — goes beyond what most homeowners are willing to do. Even the initial process of splitting a lot — before building anything — creating a new parcel map, hiring the required consultants, and paying fees to the city can cost $50,000 to $75,000 per project. The good news is that companies like Yardsworth take care of these capital outlays and make taking advantage of the new laws easy.
“If someone is interested in selling part of their yard, we do an analysis,” Lucido explains, “and the offers we make are usually six figures. Once we’ve purchased the land, the homeowner doesn’t have to do anything. We pay the fees, jump through all the hoops, and take care of the construction.”
Moreover, every property Yardsworth develops helps to solve the housing crisis in California.
Gaining Education in Real Estate Investing
However, one of the biggest barriers to real estate investing is a lack of education. “People can get themselves in trouble if they don’t understand the intricacies of real estate and other investments,” Mendenhall says. That’s why he wrote “Money Shackles: The Breakout Guide to Alternative Investing,” a book that explains REITs and other options.
Steve Davis, CEO of Total Wealth Academy, agrees. “The only catch to real estate investing is it takes a lot of education,” he says. “Don’t put a single dollar into real estate until you’ve found a mentor or group of investors and taken whatever classes they offer.”
Total Wealth Academy is dedicated to helping people obtain financial independence through real-estate investments. “People have a lot of misconceptions about investing in real estate,” Davis says. “The truth is that the barriers to entry can be very low, yet you can make more money than with stocks.”
According to Davis, while most investments just make money in one way, capital invested in real estate makes money in four ways simultaneously. “If you put your money in the stock market, you only make money through appreciation,” he points out. “If the market crashes, you lose. But with real estate, you earn gains not only through appreciation but also by acquiring cash flow from rents, accumulating equity as you pay down the mortgage, and capturing new equity through strategic purchases and improvements. Even if prices dip temporarily, you can still make money through these other means.”
That’s why Total Wealth Academy offers online courses that help people get into this promising investment territory, as well as one-on-one coaching. “Rich parents already teach their children these principles, but now it’s time for everyone to learn,” Davis says.
It’s time for Ordinary People to Win from Real Estate
Alternative real-estate investments can help you acquire wealth and lead the life of your dreams. Programs like REITs and options like selling unused land in California open up opportunities regardless of your background. By gaining education in this lucrative field, you can ensure your best results.
Don’t let the rich gobble up all the deals. It’s time for ordinary people to start reaping the rewards of real estate investing.
Copyright © 2024 California Business Journal. All Rights Reserved.