Third-party real estate has become an intriguing option that makes real estate investing more accessible to people who want to invest in real estate but don’t have the down payment or credit rating to enter the market.
There are various types of third-party real estate investments such as fractional real estate investing and real estate investment trust (REIT).
Fractional real estate is a collaborative effort of a group of people who pool assets together to purchase smaller shares of a property. The advantage of fractional investing is that these investors don’t have to know each other to get started. A platform like BuyProperly connects investors from across the country and allows them to pool their resources to invest in a property!
Being a fractional real estate owner means that you own a part of the investment, depending on your financial contribution, and you reap that reward on a fractional basis. This is passive income if you are not directly involved in the management of the property.
REITs are like mutual funds in the sense that there is a portfolio, or pool, of real estate properties that are managed by a management group. You can purchase shares in that investment and get paid out dividends on a pershare basis. The value of that share can increase over time as well.