Investing in real estate is one of the most established and reliable ways to grow wealth.

Investing in real estate is one of the most established and reliable ways to grow wealth. (Photo courtesy: Jennifer Egbert).

Jennifer Egbert

Jennifer Egbert, milehimodern

There’s more than one way to build wealth through real estate. If you’ve been wondering how to expand your portfolio, there are several options you should know about. The types of investments I share below are a different ballgame than traditional property ownership, and may offer new and exciting ways to grow your wealth. Here’s what you should consider: 

Real Estate Partnerships

If you own a home in Colorado, chances are good that you’ve been blown away by the equity you’re building. Our state, and especially the Boulder area, is an excellent choice for holding real estate. If you’re ready to branch out into other forms of investment, you may be interested in exploring real estate partnerships. There are several ways to become part of a partnership, and it can be as easy as joining forces with an investor that you know and trust (ideally, someone who has experience in property acquisition, management, or development). As part of a partnership, you aren’t required to pay corporate income tax or other entity-related taxes. You’ll simply pay individual income taxes based on your share of the profit. Partnerships are also appealing because you can pool resources to invest in properties that would otherwise be out of reach, such as raw land for development or apartment complexes. Keep in mind that as of January 1st, 2024, LLCs and limited partnerships are now required to report ownership data to the Financial Crimes Enforcement Network (FinCEN). This department of the U.S. Treasury is collecting data in accordance with the Corporate Transparency Act. If you have any questions about which types of entities are required to report, please contact your tax professional. 

Real Estate Investment Trusts (REITs)

If you’re not interested in being directly involved in real estate ownership and management, real estate investment trusts (REITs) may be a great option for you. REITs are entities that possess, manage, or provide financial backing for income-generating real estate assets. In other words, your investment will be part of a larger entity that owns or finances real estate such as offices, apartment buildings, retail centers, and other types of income-producing properties. Public REITs are traded on major stock exchanges, but there are also private REITs and public non-traded REITs. 

Real Estate Exchange-Traded Funds (ETFs)

Like REITs, exchange-traded funds (ETFs) are typically traded on stock exchanges and offer investors a diversified portfolio of real estate assets. These are investment funds that often track an underlying index or sector, and are typically focused on real-estate related companies (think: REITs, developers, and property management firms). With EFTs, you’re invested in a basket of securities without being involved in property management. 

Real Estate Notes

Real estate notes are another form of indirectly investing in real estate. Investing in real estate notes means that you’ll purchase or invest in a mortgage or deed of trust. Essentially, your investment will serve as a lender and you’ll receive regular interest payments from borrowers. If you’d like to invest in real estate notes, you can buy them directly from banks, mortgage lenders, or other investors. This option can be excellent for those who are interested in a steady revenue stream, and it also offers the potential for capital appreciation if the note is sold for more than it was purchased for. 

Crowdfunding

Real estate crowdfunding is growing in popularity, and it’s no wonder why! This flexible form of investing allows just about anyone to become an investor. Through crowdfunding, you can pool your resources with hundreds or even thousands of other investors to own a share of a property. Most platforms require a minimum investment, but this threshold is often much smaller than what you’d need for a partnership or other form of real estate ownership. Through platforms such as Fundrise or CrowdStreet, you can get started with growing your portfolio. 

Investing in real estate is one of the most established and reliable ways to grow wealth. If you’re not keen about buying rental properties or flipping houses, the less traditional options I’ve discussed here could be great additions to your portfolio. If you’d like to diversify your assets through real estate, your tax professional and wealth management team should be your first points of contact. If you prefer to go the traditional route and purchase a property to live in or rent out, I can help! Feel free to reach out if you’d like to explore the Boulder market.  

By Jennifer Egbert. Jennifer is an award-winning, top-producing REALTOR® with over twenty years of experience. Her commitment to her clients, enthusiasm, and determination drive her to be at the forefront of the real estate industry. Jennifer is a licensed residential agent who specializes in the Boulder, Colorado market. She is the leading expert in Boulder Luxury neighborhoods, the best builders, and most current market conditions. Her advantage is not only her expertise and unparalleled marketing, but also her ability to guide her clients through the transaction with the least amount of stress and anxiety as possible. To learn more about the Boulder real estate market and general community events & news, follow her on Instagram and like her page on Facebook.