Real estate without buying a house

By The Investing Fox · General information, not investment advice

Property is one of the oldest ways to build wealth, but buying a building takes a large deposit, a mortgage and time. There are now several ways to get exposure from much smaller amounts.

Three ways in

• REITs (real estate investment trusts). Listed companies that own property such as warehouses, apartments or data centres and pay out most of their income as dividends. You buy them like a stock or through a REIT ETF, so you can sell any trading day.
• Real-estate crowdfunding. Platforms pool investors into a specific building or a loan secured on one. Returns come from rent, interest or a sale. Money is usually locked up for the life of the project.
• Fractional and tokenised property. Newer platforms sell small shares of individual homes or buildings. Read carefully what you actually own: a share of a company that owns the property, or only a contract with the platform.

What to check

• Is the return from rent (steadier) or a sale or development (riskier)?
• For loans: the loan-to-value and what happens if the borrower defaults.
• Total fees and how and when you can get your money out.
• Who holds the asset if the platform itself shuts down.

The catch

Property prices and rents are sensitive to interest rates. Listed REITs can fall sharply with the stock market, and private deals can stop paying or be delayed with little warning.