5 Ways To Invest In Real Estate and Earn
Here are 5 common ways to invest in real estate, each with different structures, benefits, and legal implications:
1. Direct Individual Ownership (Personal Name or LLC)
Description: Buy property outright in your own name or through a Limited Liability Company (LLC).
Ideal For: Hands-on investors, flippers, landlords.
Pros:
Full control over the property.
Potential for rental income, appreciation, and tax benefits (depreciation, mortgage interest).
Cons:
High upfront capital.
Full responsibility for management and liability (unless using an LLC).
2. Self-Directed IRA / 401(k)
Description: Use retirement funds to invest in real estate through a Self-Directed IRA or Solo 401(k).
Ideal For: Investors with significant retirement savings.
Pros:
Tax-deferred or tax-free growth (Roth).
Diversifies retirement portfolio beyond stocks/bonds.
Cons:
Strict IRS rules (e.g., no self-dealing or personal benefit).
Must use a custodian or administrator.
All profits stay in the retirement account—no personal benefit until retirement age.
3. Real Estate Investment Trusts (REITs)
Description: Buy shares in publicly traded or private companies that own income-producing real estate.
Ideal For: Passive investors looking for liquidity and diversification.
Pros:
Low barrier to entry (can invest with as little as $100).
Liquidity (especially public REITs).
No property management required.
Cons:
Limited control over assets.
Subject to stock market volatility (for publicly traded REITs).
Dividends are taxed as ordinary income.
4. Real Estate Syndications / Funds
Description: Pool money with other investors to buy larger real estate projects (usually multifamily, commercial, etc.).
Ideal For: Accredited or sophisticated investors seeking passive income.
Pros:
Access to larger deals with expert management.
Passive returns via preferred equity, profit splits, etc.
Often offers better returns than REITs or individual rentals.
Cons:
Illiquid—capital may be tied up 3–7 years.
Requires due diligence on sponsors/operators.
Often limited to accredited investors.
5. Real Estate Trusts (e.g., Living Trust or Land Trust)
Description: Hold property in a revocable living trust or land trust for estate planning, anonymity, or protection.
Ideal For: Asset protection, estate planning, legacy wealth building.
Pros:
Avoids probate.
Provides privacy (especially land trusts).
Can assign beneficiaries easily.
Cons:
Doesn’t inherently offer investment growth—structure for ownership, not income.
Requires legal setup and may need a trustee.
Important!
When you create an account with SideWalk Realty & Investment, you will be asked to provide some basic information. Once your account is set up, you can access all information available on the website. However, in order to invest, you will need to be verified as an investor.
When you start the investor application, you will be able to select how you will be investing with SWRI (as an individual, an entity, retirement account, or a trust). It is important that you select the way you want to invest prior to applying, because the way you get verified, is the way you will be investing.
If you would like to invest two different ways, for example as an individual and a retirement account, you will need to open two separate accounts with SWRI and get each account verified.
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