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How To Spot Alternative Real Estate Investments

I don’t know but you but I’ve had enough of the stock market for now. The recession of 2008 to 2010 has wrecked havoc on the stock market dropping it as low as 30 to 40% only to shoot back up again and then back down again; it’s a roller coaster that I don’t want to deal with anymore.

Which begs the question, what should I invest in if not the stock market? The answer may be real estate. Yes the real estate market hasn’t fared much better than the stock market during the current recession but things may be turning around which means that it might be the right time to get into real estate as we speak.

But I’m not the kind of guy that wants to own a bunch of rental units because I’m not the kind of guy that wants to get telephone calls at three o’clock in the morning because one of my tenants has just discovered that their stove is broke or their hot water heater has gone on the fritz. I’d like to take advantage of real estate investing without all the hassle of… well… tenants!

If you’re with me, then read on because that’s exactly what I’m going to talk about today; alternative forms of real estate investing that you may not have ever thought about.

One form of real estate investing is to invest in real estate investment trusts or REITS as they are commonly referred to. This has been a very attractive form of real estate investing in the past, but these entities are often closely tied into the stock market and that market correlation has dragged down profits over the years during the recession so I’m not entirely sure that they are the best place for my money today.

One type of investing that many people have never even heard of are called mortgage loan partnerships and these may be some of the fastest growing types of real estate investments that you can find today. In addition to being fast growing, they are also some of the safer investments out there which may surprise you, I know it surprised me!

So here’s how they work. These partnerships usually invest in properties that have much higher values than the mortgages that underlying them. Usually for as little as $1000 an ordinary investor can buy a share in a partnership. That partnership then purchases mortgages on commercial properties. The mortgages that are written are written slightly differently than your ordinary mortgage allowing the partnership to benefit from any rent increases on the property over time.

One thing to keep in mind is that there isn’t often a secondary market for these mortgages meaning you often have to hold them until maturity and you can’t really just call up your stockbroker and sell these things if you get tired of investing in them or your financial situation changes.

The stock market may be in chaos right now and the real estate market may not be that much better off but we’re starting to see signs of a real estate turnaround which leads me to think that now may be the perfect time to jump back in.

Written by Jason Markum

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