How to Invest in Real Estate Online
While you can't simply buy and sell real estate online, it is possible to invest in real estate via your computer. Real estate investment trusts (REITs) are publicly traded corporations or trusts that own and manage real estate on behalf of the shareholders. They are similar to mutual funds in that they pool the cash resources of their investors. However, the resources are used to manage real estate. REITs are a way for individuals to gain exposure to real estate without having to deal with the work of finding properties, maintaining them and renting them out.
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Instructions
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Open an account with an online brokerage, ideally with a company that charges low fees to buy and sell stocks and charges no account maintenance fees. There are plenty of good discount brokerages available so you shouldn't have trouble finding one.
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Begin to research REITs. REITs are traded like stocks. They have ticker symbols, and they move up and down with the market; most pay dividends to shareholders. Most REITs choose one aspect of real estate in which to specialize, including office buildings, malls and residential properties. It's best to find one to three that suit your preference. Because they trade like stocks, there is no minimum investment, but it is not a good idea to make frequent small purchases because you pay a transaction fee each time.
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Read everything you can about particular REITs that interest you. Read the annual report, prospectus and message boards. Learn about what you should look for in an REIT.
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Purchase your first shares through your online discount brokerage once you have sufficiently educated yourself.
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Tips & Warnings
If you're investing for retirement, carefully consider how much of your money you will allocate to real estate.
REITs can be a great source of dividend income because they are required to pay 90 percent of taxable income to their shareholders. This is a major reason people invest in them, and why they find a place in the portfolios of retirees who want to allocate a small portion toward something more aggressive than bonds.
REITs, like all investments, carry the risk of significant loss. The recent crash in the housing market demonstrates that REITs can be risky. Do not invest in REITs or any other asset until you have done your own due diligence.
There are online real estate auction sites, where you can "purchase" real estate sight unseen. Ebay has a real estate section, for example. However, you can't enter into an agreement to purchase real estate by winning an auction. You'll still have to at least talk to the seller over the phone to work out a deal and sign papers. Have the property inspected, get the title checked and look at the neighborhood before buying. Online auction sites can be useful for finding properties that aren't on traditional real estate listing sites.
References
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