When it comes to financing your investments, whether it be your real estate projects or your other business investments, your options are growing by the day. Business owners and project sponsors are no longer tied to the bank loan. In fact, with the number of marketplace lenders on the rise, there are plenty of investment financing alternatives. Here are five that are easier to obtain, often present better terms for the borrower, and most effective in improving your financial position.

5 Alternative Real Estate Financing Options

  • Cash out refinance – If you own real estate properties now, instead of taking out a bank loan for your next investment property, take one or more of your existing properties and refinance them, extracting equity you have built in those properties. This can be beneficial in a number of ways. For starters, you may be able to refinance at a lower rate, especially if you are combining two existing mortgages into one. Secondly, you can take your equity from existing properties and acquire your new one, or lower your financing by using your equity as down payment on a new project.
  • Hard money – Hard money lenders have their own criteria, but these make great loans for short-term projects. They are often high interest, so make sure you pay them back on time, but the benefit is you can fund a project using hard money, then refinance the project and pay your hard money loan back upon completion of the project. Hard money lenders usually fund projects they believe in without making the borrower jump through a lot of hoops.
  • Get a partner – If you get the right partner, you get a lot more benefit than funding for your real estate project. You could get a valuable partner with experience that you don’t have. A mentor who believes in your project and comes to the table with capital to see the project through to completion is a real estate investor’s dream. Tap into your network.
  • 1031 exchange – A 1031 exchange allows you to sell one property and purchase another one of equal or greater value as long as you follow a few simple rules. The big benefit to these exchanges is you can defer your capital gains on the sale of your investment property. Then you can take those gains and buy a bigger property that will provide you with bigger returns. This is a great option to bank lending if you are a rental property investor who wants to grow a portfolio while increasing passive income.
  • Marketplace lendingMarketplace lending is another option. With this funding vehicle, you list your real estate project on a platform that allows individual and institutional investors an opportunity to invest in it. There are two types of investments that make this option good for both the capital seeker and the funder. Equity-based investment allows real estate project sponsors an opportunity to fund a project while giving up some of the equity in that project to the investors. The benefit is you do not have to pay back a loan in the event your project does not succeed. Debt-based investments mean that investors lend you the money and you pay back the loan over time, which means you get to keep all the returns on the back end of the deal.

There are plenty of ways to finance a real estate deal in today’s fast-moving market. Be sure to perform your due diligence on any lenders, funders, or platforms you intend to work with.

When it comes to financing your investments, whether it be your real estate projects or your other business investments, your options are growing by the day. Business owners and project sponsors are no longer tied to the bank loan. In fact, with the number of marketplace lenders on the rise, there are plenty of real estate investment financing alternatives. Here are five that are easier to obtain, often present better terms for the borrower, and are effective in bettering your financial position.

5 Real Estate Investment Financing Alternatives to Bank Loans

  1. Cash out refinance – If you own real estate properties now, instead of taking out a bank loan for your next investment property, take one or more of your existing properties and refinance them, extracting any built up equity you have in those properties. This can be beneficial in a number of ways. For starters, you may be able to refinance at a lower rate, especially if you are combining to two existing mortgages into one. Secondly, you can take your equity from existing properties and acquire your new one, or lower your financing by using your equity as down payment on a new project.
  2. Hard money – Hard money lenders have their own criteria, but these make great loans for short-term projects. They are often high interest, so make sure you pay them back on time, but the benefit is you can fund a project using hard money, then refinance the project and pay your hard money loan back upon completion of the project. Hard money lenders usually fund projects they believe in without making the borrower jump through a lot of hoops.
  3. Get a partner – If you get the right partner, you get a lot more benefit than funding for your real estate project. You could get a valuable partner with experience that you don’t have. A mentor who believes in your project and comes to the table with capital to see the project through the completion is a real estate investor’s dream, but it’s not just a dream. It does happen. Tap into your network.
  4. 1031 exchange – A 1031 exchange allows you to sell one property and purchase another one of equal or greater value as long as you follow a few simple rules. The big benefit to these exchanges is you can defer your capital gains on the sale of your investment property. Then you can take those gains and buy a bigger property that will provide you with bigger returns. This is a great option to bank lending if you are a rental property investor who wants to grow a portfolio while increasing passive income.
  5. Marketplace lending – Marketplace lending is another option. With this funding vehicle, you list your real estate project on a platform that allows individual and institutional investors an opportunity to invest in it. There are two types of investments that make this option good for the both the capital seeker and the funder. Equity-based investment allow real estate project sponsors an opportunity to fund a project while giving up some of the equity in that project to the investors. The benefit is you do not have to pay back a loan in the event your project does not succeed. Debt-based investments mean that investors lend you the money and you pay back the loan over time, which means you get to keep all the returns on the back end of the deal.

There are plenty of ways to finance a real estate deal in today’s fast-moving market. Be sure to perform your due diligence on any lenders, funders, or platforms you intend to work with.

There are a lot of reasons to close a real estate purchase as quickly as possible. When investors can get to the closing table quickly, they can appease a seller who wants to get a property off their hands as quickly as possible. At the same time, there’s fewer chances of something “going wrong” in the seller’s’ life that may lead to a problem in the sale.

Quick real estate closing in the investor world can also help investors to access lower mortgage rates. This is because rates worsen as the number of days required to close the loan increase. When borrowers can close a deal in fewer than 30 days, they should be able to benefit from a better interest rate.

Often, in the world of real estate lending, the biggest delays with property purchases occur during the underwriting period. The good news is that with a little bit of prep work and the right support, investors can help to make the process run as smoothly and quickly as possible.

Getting Your Documentation in Order

There are various steps that a real-estate investor will need to take before they can get a mortgage approved. Unless they have hard money to pay for a property, then borrowers will need to give their lender all the information they need to determine whether they’re a risk, or a safe bet. For instance, they’ll need documents that indicate how the borrower is going to be able to afford the mortgage, alongside information about credit ratings.

Investors should make sure that they have all the signed loan documents you need in place before approaching the underwriter’s table and take the time to ensure that all their permits are ready to go too. The more prepared they are with the right literature, the more likely it is that they’ll be able to speed the closing process along.

The more time an investor spends in world of real estate lending, the more familiar they’ll become with the kind of documents they need to provide to get their loan approved. This will mean that they can prepare files in advance.

Demonstrate Your Exit Strategy

Another great way to improve the chances of faster real estate closing processes, is for borrowers to make sure that they have a pre-established exit strategy in place. Some real estate lending companies are cautious about working with investors. This means that they need to see evidence that the investor will be able to pay off the loan that they take out before they’re willing to hand over the cash.

Most experienced investors will work with a bridge lending platform like Sharestates to quickly fund their project and then refinance with a traditional lender after a 6-24 month period.

Often, an exit strategy will depend on the borrower’s position with other assets, their retirement plan, and your income. However, it’s worth noting that some banks and lenders will refuse to accept the strategy if it doesn’t meet their policy, or it isn’t considered “realistic”. Professional real estate lending companies may be able to work with an investor to help them compile an exit strategy – but this could mean that closing the loan takes longer.

With the right opportunities, a property investor can establish their financial freedom, creating a powerful source of income in an area that’s never likely to lose interest – real estate. While financial freedom means different things to different people, it’s important for any borrower or investor to have a reliable exit strategy in place for when they want to slow down and stop selling.

While there are plenty of exit strategy options available depending on what kind of real estate financing an individual has, the following are the three most common solutions for property professionals.

Sell the Portfolio to Pay Down Debts

If an investor chooses carefully-selected properties in great locations, they should be able to put their buildings on the market quickly to get rid of their investments. They might even choose to sell several properties in their portfolio and use a real estate bridge loan to buy one final “nest egg” property that they’ll keep for the foreseeable future.

How an investor chooses to use the money obtained from selling their portfolio will depend on their personal goals. Some may choose to pay off the family home or fund retirement, while others will want to diversify their investment strategy. The biggest issue with selling the portfolio is that investors will be subject to capital gains tax on the homes sold.

The Buy and Hold Strategy

If selling the portfolio and paying off the debts accrued from real estate financing isn’t an option, some investors may choose to review their portfolio and see if they can transform the way they use the houses in their repertoire. Some real-estate tycoons simply buy property to fix them up and sell them on at a higher rate. However, it’s also possible to make long-term money on property by renting it out to people looking for an affordable new home.

The buy and hold strategy is often suitable for mature couples who want an ongoing solution for income. However, it’s important for investors who want to rent out their properties to make sure that they charge renters enough so that they can pay off both the interest and principle of the mortgage, while earning an income.

The idea is to purchase property that is either neutral or cash flow positive, with the aim of increasing yields over time. This exit strategy allows investors to add more property to their portfolio, while rent income covers the interest on the mortgage and provides additional equity for future investments. Over the years, the rent prices should rise to keep pace with inflation – providing a source of consistent cash.

Restructuring the Investment Portfolio

The best exit strategy for any property investor will always depend on their risk tolerance, income retirement and other personal factors. Some people will prefer to sell a couple of properties so that they can put some cash into bonds and stocks for diversification. Others will want to sell properties to reduce their loan-to-value ratio.

Those reliant on income from their property portfolio to support their retirement will often need to look at their assets and think about restructuring over time. When an exit strategy becomes necessary, it’s important to stop focusing entirely on capital growth and start looking for sources of rock-solid income. Investors holding properties that don’t yield particularly well may need to do some refurbishment and recycle their funds or offload leasehold properties in favor of freehold to reduce service charges.

Currently, 29 states and the District of Columbia (DC) have enacted laws that make the use of marijuana legal. Seven of those states, and DC, have legalized the recreational use of marijuana. Several more have legalized medical marijuana. Naturally, the growth, harvesting, manufacturing, and sale of cannabis-related products will have an impact on real estate. Real estate space will have to be dedicated to each stage of the production process from growing marijuana plants to selling the product to the end user. Here’s how borrowing and lending 420 loans for cannabis-related businesses is having an impact on real estate across the U.S.

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Banks Are Out, Hard Money Lenders Are In

Even though marijuana is legal in more than half the states, it is still illegal federally. Because of that, banks see lending 420 loans to marijuana-related enterprises as risky business. If they run afoul of the federal government, the fear is they could lose their banking license. For that reason, banks have been reluctant to lend 420 loans to cannabis-related businesses for any reason, including for the purchase of real estate, an activity for which banks have historically been eager to lend money to business owners.

This reality does not mean that marijuana businesses are out in the cold, however. Many of these businesses are turning to private money lenders, instead. Inc. Magazine says the pot business is really the real estate business.

What Marijuana Product Manufacturers Use Real Estate For

Two areas of real estate development that are impacted heavily by the legalization of marijuana are commercial real estate and industrial real estate.

Commercial real estate is used for the sale and distribution of pot-related products. Whether for recreational or medical use, cannabis must be sold over the counter in places where there is no longer a prohibition against it. Therefore, retail shops and medical marijuana dispensaries are either leased or purchased to keep the product available for those who want or need it.

Industrial real estate involves the growth and harvesting of marijuana plants and the manufacturing of the end product in whatever form it may eventually take. In Denver, Colorado, for instance, marijuana growth operations grew by 14% to 4.2 million square feet from Q2 2015 to Q4 2016.

A New York Times article published in April this year reported that California saw $100 million in real estate transactions related to marijuana businesses since recreational marijuana was legalized in 1996. And across the board, in states where marijuana-related real estate transactions are taking place, real estate values are on the rise. Rents as well as buying terms are all on the rise. Cannabis is driving huge real estate transactions.

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What Kind of Real Estate Properties Are Affected?

Because marijuana is a plant that is often grown indoors, mostly because it is still illegal according to the federal government and indoor cultivation allows growers to shield their operations, pot businesses need a place to grow the merchandise. This is often done in greenhouses and warehouses.

Because there are many different types of marijuana products, warehouse facilities can be retrofitted to meet the needs of manufacturers. From food products, which require kitchens and bakeries, to oils and tablets for medical use, industrial real estate for cannabis is as diverse as the broad industrial real estate category in the U.S. The space has grown so lucrative that some investment-minded entrepreneurs have established marijuana real estate REITs and funds for those who want to get in on the green without getting their hands dirty.

Then there are the storefronts. Medical marijuana dispensaries can look like a regular retail outlet or a doctor’s office. Some are simply locations where users with the right qualifications simply show up, pick up their prescription, and head home—much like a trip to the pharmacy.

In states where it is legal, marijuana has become a multi-billion business. In order to keep the production going, business owners will need to purchase or lease real estate, and many of them are borrowing the money to do so. To cover the demand, lenders specializing in 420 loans have popped up in most of the states, and they’re not expected to go anywhere any time soon.

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Every location has some element of inclement weather that the residents of that area must deal with on an ongoing basis. There may be very pleasant days at some times. When the dirge of the specific weather condition comes, everyone must contend with it. For some locations it is the potential for hurricanes or tornadoes. For others it is the seasonal change from fall to winter.

Investing in residential real estate in colder climates sometimes means the real estate investor has to pay attention to primary household systems. These house hold systems may seem to add little to the marketability of a home. However, it is good to remember that the buyer of that investment property will live in that colder climate. The buyer may appreciate the climate specific renovations that the investor completed.

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Insulation For Your Residential Investment Property

Older housing stock may not have the amount of insulation required by current building codes or preferred by current buyers. While insulation in walls is difficult to improve, blown in attic insulation is both inexpensive and easy to install. It is, however, a messy and sweaty job. Cellulite insulation made from recycled newspaper, and other sources, is a good option for the fix and flip investor. It provides the required insulation at the lowest cost.

Plugging holes in the house is the proverbial no-brainer. Incredibly, even houses in cold climates often have shifted and created gaps along the foundation and other structural elements. Pay close attention to areas such as outdoor water spigots where pipes pass through walls. Calk and expanding foam are inexpensive, but unfortunately do little to improve resale value.

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Window and Door Renovations For Real Estate Investments

This category is where there can be a significant payback in resale value. Replacing older single pane windows with energy efficient double pane improves the heat retention of the house while adding to the curb appeal. Potential buyers will probably immediately notice the windows, especially those who have lived in the cold climate for any length of time.

Exterior doors are also a prime candidate for an upgrade in colder climates. Again, the payback in marketability is noticeable. In fact, painting a front door is one of the most commonly recommended ways to increase curb appeal. Potential buyers stepping across a well insulated threshold and who notice the tight fit of the front door have moved one step closer to buying.

Garden Renovations For Fix and Flip Investments

Even for a fix and flip investment, some major value can be gained from planting trees at the renovated property. Arborvitaes are a relatively inexpensive shrub that can grow to over 6 feet and act as an effective windbreak. Consider putting a line along the north and west property lines. Keep in mind that west sun is valuable for warmth. If there is enough room plant the arborvitae far enough from the house so that it only blocks the wind, not the sun.

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Older, mature trees on the property may require some attention as well. Heavy snow is a hazard for tree branches, so make sure trees are properly pruned so branches do not overhang the house. Hire a professional arborist for this job. Like attic insulation, this might not translate into curb appeal, but individuals accustomed to living in a cold climate will appreciate the attention to detail.

All these renovations are in addition to the painting, renovating, and remodeling that are the stock in trade for fix and flip residential real estate investors. Like hurricane-proof roofs in Tampa, Florida, these climate specific ideas have their place. Make a list of them and be sure every prospective buyer knows how the house has been upgraded and prepared for the coming winter chill.

Storm damaged residential real estate seems like the perfect fix and flip opportunity. The premise of repairing the storm damage and flipping the house may seem straightforward. As anyone experienced in renovations can testify there is nothing straightforward about this aspect of the real estate investment business.

Find The Right Fix and Flip Investment Opportunity

Storm damage is typically covered by homeowners insurance. The owner has little to no financial incentive to sell a house simply because it has been damaged by a storm. Homeowners policies even cover loss-of-use. This means an owner who cannot live in the house can receive reimbursement for staying at a hotel while repairs are being made. This limits the fix and flip opportunity to homes that are already owned by a bank or some other atypical owner.

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Those houses may or may not have been good fix and flip opportunities before the storm damage happened. The storm damage has certainly made a bad situation worse. The question of economics that applies to all real estate investments still applies to storm damaged properties. Will the eventual sale price cover the cost of all the necessary repairs and renovations? Will it provide an acceptable return on investment for the time involved?

Have Available Contractors to Repair The Real Estate Investment

If the answer to that question is yes, the real estate still may not qualify for a fix and flip investment. Homes that have suffered storm damage are very likely located in storm damaged areas. Heavily storm damaged areas mean contractors in those areas are in high demand. Contractors have their pick of jobs to accept. Even an established relationship with a contractor is no guarantee they will be available at the right price following a major storm.

Fix and flip investors who typically do their own work may find that storm damaged homes present a challenge beyond their ability. Roof repairs generally require professionals. Many times the problem may be much worse than just missing shingles. Siding that has blown off requires specialized tools and expertise to repair effectively.

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Protect the Investment Property From Future Storms

If contractors are not readily available to do the work at the right price, it is absolutely critical to secure the property to prevent further damage. More storms may be on the way. Storm damaged homes are weakened in some way. Another high wind can pick up on those weaknesses and create extensive damage. The cost of these emergency repairs has to be included in the economic calculation.

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In addition, time is of the essence. If the property has been damaged by flood, the wet materials have to be removed before mold starts to form. Drywall has to be removed and discarded. Carpets have to be torn out. All of this must be done quickly to prevent further damage. Although none of this necessarily requires professionals, the immediate demands of the project have to be considered one of the costs involved in a fix and flip calculation.

There are other problems with storm damaged real estate as an investment, but these three alone may give the fix and flip investor reason enough to avoid the property. However, this real estate segment is not for the faint-of-heart in the first place. Tackling significant problems is how investors profit in this sector.

 

Weather affects home sales.  This is a very straightforward conclusion that can be drawn by anyone trying to sell a home during a blizzard, hurricane or other severe weather event. If potential buyers cannot get to the house, they cannot make a decision to buy it. A flooded street ends foot traffic and destroys curb appeal.

Closely related to this is the theory that weather affects mood, and buyers in a lousy mood do not decide to buy. They may find something they like, but their natural inclination is to say “no” because of a bleak mood. This is a theory from behavioral science that has been repeatedly tested as it relates to the stock market. Obviously there is a significant financial reward for anyone who can predict an up or down day on Wall Street, and weather seems an obvious driver.

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What Drives The Residential Real Estate Market?

Residential real estate investing can be very lucrative, but there is no doubt that it is difficult. In fact, the two may be very closely related. The old saying, “If it was easy everyone would do it.” certainly applies to making money on real estate investments. Fortunately, with everything else that has to be considered, real estate investors can rest assured that it is rare for any deal or project to go down the tubes because of the weather.

The simple fact is that there are so many factors which impact the value and strength of the real estate market that weather is simply not a contributing factor. The studies on weather and the stock market have been inconclusive. A potential buyer who does not come out because it is raining will come out 24 hours later when the rain lets up.

The fact is that residential real estate buyers are brought to the market for a variety of reasons, none of which have anything to do with the weather. They set aside time based on work and activity schedules and look at houses at these pre-determined times. The blog post linked at the start of this article blamed rain in Seattle for low traffic at the property. If people in Seattle stayed inside when it rained they would never come outside.

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Home Sales Indicate Real Estate Investors Are Still Active

The National Association of Realtors (NAR) reports that home sales fell in August to an adjusted low of 5.35 million homes. This is down 1.7% from the previous month. However, the primary factor they cite is the continued lack of supply in the market. Incidentally, the NAR report says cash deals still account for about 20% of the market, up from the previous month but down slightly from this time last year. This indicates real estate investors are still very active in this market.

Of course, all real estate is local, and all weather is local too. We may commiserate with folks in Houston or Florida, but it is the weather outside our own windows that impacts our behavior. This means that a blizzard or hurricane will impact the real estate market in that location for a period of time. But eventually the streets get plowed and the storm damaged is cleared away. Business, and life, tends to get back to normal fairly quickly.

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Cause and effect is often very difficult to see amid the clutter and influence of different factors. In fact, it is so easy to draw wrong conclusions between two items that there is a fallacy in logic that covers this practice. Real estate investors do well to avoid this when it comes to weather and stick to the fundamentals when buying or trying to sell a piece of residential real estate.

Curb appeal is a critical part of marketing real estate investment properties, and each season brings its own unique challenges and opportunities. The need to make a great first impression in the fall is just as great as any other time of year, but the distinct quality of fall presents some fantastic opportunities that are just not available in the winter, spring or summer.

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Maintain The Lawn and Garden

Of course, well maintained plants that can be seen from the car are a great way to make a warm welcome to a prospective buyer. This is true even if they are in planters or other temporary containers. Cold overnight temperatures can kill ornamental plants even if the day before was warm and sunny. If possible, cover plants overnight with a drop cloth to protect them and preserve the curb appeal of a well planned and tended garden.

If this is too labor intensive, just be sure to remove dead plants as quickly as possible. Nothing gives a worst first impression than greeting buyers with a job to be done. Consider replacing annual flowers with hearty Mums that withstand the early frost and provide a brilliant splash of color. A fall decoration like corn stalks or pumpkins can add a festive touch as well.

Be sure the lawn is cleaned of leaves regularly. Again, raking leaves is a chore and while a lawn full of them is colorful and is unique to fall, not everyone appreciates the beauty. A lush green lawn is appealing at any time of year, so if you have invested in one be sure to show it off to prospective buyers as they pull up in their cars. Also, be absolutely sure that the gutters are cleared of leaves as well.

Stage Inside The Investment Property For Fall

Although anything inside the house is technically not curb appeal, there is a fantastic strategy for staging a house in the fall that needs to be mentioned. Bring in a dining room table and set it for a holiday dinner!  Any buyer looking at a house in the fall is considering what it would be like to live there at Thanksgiving and other upcoming holidays. Setting a table with some decent china bought at Goodwill or other second hand store helps them easily see themselves living in the house at the holiday.

Of course, before prospective buyers can see inside they have to come in the front door, and this portal can be seen from the curb. Decorating the lawn with cornstalks and pumpkins was already mentioned, but the opportunity to add a door decoration should not be passed up. Think of someone living there would welcome visitors to Thanksgiving dinner. An appropriate door decoration featuring this theme, even well before Halloween, can get the prospect thinking how nice it would be to live there in the coming months.

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Invest in Proper Lighting For The Real Estate Property

Outdoor lighting is a more significant upgrade, but one that is well worth considering. Keep in mind that fall means shorter days, and prospective buyers may well be coming by in the evening after the sun has set. A well-lit porch or entranceway is very inviting and adds a touch of security as well. Just be sure the lights are on when buyers are expected. In fact, leaving them on will add little to the electric bill and welcome unexpected buyers.

Of course, it is better if real estate agents call before showing a house, but marketing a residential real estate property means being ready for prospective buyers at all times. In fact, a real estate agent who has the listing can be a true ally in the fall or any time of the year. They may be able to be at the house to point out the benefits at a moment’s notice.
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Real estate investing is one of the most lucrative alternative asset classes and has resulted in thousands of people in the U.S. rising to millionaire status within a few years. While it does have its risks, it also has many rewards. Here are nine reasons real estate investing is a steady road to riches as opposed to a get rich quick promise that will likely go unfulfilled.

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Ways to Earn Income by Real Estate Investing

1. Rental properties deliver ongoing passive income. Whether you buy and hold single-family residential properties or multi-family real estate, the opportunity to earn passive income can’t be beat. Sure, there are ongoing expenses, but well-managed properties earn investors monthly dividends for as long as they own the real estate.

2. Real estate crowdfunding makes real estate investing more convenient, affordable, and accessible to more investors allowing those investors to build diversified portfolios by spreading their money around in different types of real estate investments such as commercial, industrial, rentals, fix-and-flips, and more.

3. REITs are tied to the stock market but make your investment portfolio more diversified. REITs are popular right now because they don’t require investors to actually touch the real estate they own. This investment vehicle works more like a stock, but it’s real estate. Today’s REITs are earning investors consistent double-digit returns.

4. Real estate investments can be held in a self-directed IRA with your earnings re-invested, which will save you on capital gains taxes and increase your distributed earnings exponentially over time. Even real estate crowdfunding investments can be held in a self-directed IRA.

5. 1031 exchanges are another way to keep your investment earning by compounding the benefits on top of one another. The idea is to sell a piece of real estate that you own and buy another of greater value. By doing so, you avoid paying taxes on the gains of the first piece of real estate. There are strict rules you have to follow regarding hold times, property values, and property identification, but if you follow all the rules, 1031 exchanges can propel you to greater returns.

6. Property flipping can earn you short-term profits, which you can then re-invest for greater returns. Buying a piece of real estate, improving it, and putting it back on the marketplace is a great way to earn short-term returns. Re-invest those returns into the purchase of your next property. By growing your business slowly, you can walk your way up the financial ladder of success.

7. Now, investors can use cryptocurrencies to invest in real estate. It’s risky, but it is another channel that offers diversification and security in your real estate transactions.

8. Commercial leasing offers long-term benefits and passive income, too. Unlike residential rental properties, commercial leases tend to be long term, as in years. You can have a tenant for 10 or 20 years. Commercial office leasing is very lucrative.

9. Airbnb allows you to rent out a room of your home to travelers earning short-term profits from real estate not currently being used. You can rent out single rooms allowing you to capitalize on your own residence, a great option for empty nesters whose children have moved on and left empty rooms behind, or you can rent out entire properties for short durations. If you live near a tourist destination, this option allows you to compete with bed and breakfasts and other hospitality sector businesses without actually being in the hospitality industry. This could be a great way to earn extra income that you can re-invest in other real estate deals.

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Real estate investing is getting better and the many faces of real estate crowdfunding is one reason why.