A quick Google search shows that real estate is considered one of the best alternative investments today. In April, USA Todayhad an article headlines “Worried about the next bear market? Real Estate may be your best investment. Really.” The Balance, Investopedia and Money Under 30 did a comparison to investing in stocks and real estate in July. The list goes on and on.
But what is the best way to invest in real estate today?
Most people think of real estate investing almost exclusively as buying a rental property or investing in real estate companies. Forbes, for example, had on article in April 18th that was titled “9 ways to Invest in Real Estate”.
In the article 6 of “the ways” were investing in a fund, private company or REIT. This included crowdfunding. None of these options give any control to the investor. Rental properties was also another way to invest but most passive investors don’t care for the liability and management aspects of this approach.
That left us with 2 more ways.
The other 2 alternatives were both in the “paper-side” of the business: Real estate notes and hard money lending. Hard money loans are short term, high interest acquisition loans and require active participation.
The best comment
When writing about real estate notes, I was pleased to read the author stating, “so far, my experiences have only been positive”. Notes can be a very passive, high return and safe investment. If you combine the very basis of the contracts, collateral, and exit strategies, the benefits to note investing are tough to beat.