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HOW TO INVEST IN REAL ESTATE

Educational guide to the common paths into real estate investing, from direct ownership to funds

Category: Guides

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Real estate investing generally covers a wide range of paths, from buying a single rental home to holding a share of a large commercial property through a fund. This is a general educational overview of the more common paths available to Las Vegas area investors. It is not investment advice, and any specific strategy should be evaluated with a financial advisor.

Direct Ownership of Rental Property

Direct ownership generally means buying a property, such as a single family rental home or small multifamily building, and managing it personally or through a property manager. This path generally gives an investor full control over the asset, including financing, tenant selection, and eventual sale timing, but it also generally requires more hands on involvement and generally concentrates risk in a single property or a small number of properties.

Real Estate Investment Trusts

A real estate investment trust, generally called a REIT, generally allows an investor to buy shares in a company that owns and operates a portfolio of properties, offering liquidity similar to a stock and generally requiring no direct property management. Publicly traded REITs generally trade on major exchanges, while non traded REITs generally offer less liquidity, and neither type of REIT interest generally qualifies as real property for 1031 exchange purposes.

Syndications and Crowdfunding

Real estate syndications and crowdfunding platforms generally pool capital from multiple investors into a single property or portfolio, managed by a sponsor, in exchange for a partnership or membership interest. These structures generally may be securities, and Las Vegas investors considering them should generally understand that a partnership or LLC membership interest generally does not qualify as like kind real property for a 1031 exchange, even though the underlying asset is real estate.

Delaware Statutory Trusts and Tenancy in Common

For investors who specifically want to combine passive ownership with 1031 eligibility, a Delaware statutory trust, generally called a DST, or a tenancy in common interest, generally called a TIC, can generally qualify as real property for exchange purposes under current guidance, unlike a typical syndication or crowdfunding interest. DST and TIC interests may be securities, and this site does not sell securities. We provide introductions to licensed providers only, and any DST or TIC investment should generally be reviewed carefully with a securities professional and a tax advisor before committing capital.

Matching a Path to an Investor's Goals

A Las Vegas investor generally choosing among these paths benefits from weighing a few consistent factors, including how much control over the property they want to retain, how much time they are willing to spend on management, how much liquidity they need, and whether they specifically need 1031 eligibility for exchange proceeds. An investor selling a management intensive rental home and wanting to fully step back from day to day involvement generally leans toward a DST or a professionally managed triple net property, while an investor who wants to remain hands on generally leans toward direct ownership of another rental or small commercial building.

Starting Small and Building Experience

Many real estate investors generally start with a single direct ownership rental property, using the experience gained managing that property to inform later decisions about whether to scale up through additional direct ownership, shift toward more passive structures, or pursue a 1031 exchange once the first property has appreciated. This overview is general and educational, and any decision about which real estate investing path fits a specific investor's situation should generally be made together with a financial advisor, and where securities are involved, a licensed securities professional as well.

Why the Las Vegas Market Attracts New Investors

The Las Vegas valley's ongoing population growth, diverse employment base, and lack of a state income tax have generally made it a market that both local and out of area investors generally consider when researching how to invest in real estate. A first time investor evaluating the Las Vegas market generally benefits from comparing multiple submarkets and property types before committing, rather than assuming any single neighborhood or asset class is automatically the right entry point, since fundamentals generally vary meaningfully across the valley.

Frequently Asked Questions

HOW TO INVEST IN REAL ESTATE FAQS

What is the simplest way to start investing in real estate?

Generally direct ownership of a rental property is the most straightforward starting point, though it generally requires more hands on involvement than other paths.

Do REIT shares qualify for a 1031 exchange?

Generally no. REIT shares are generally treated as securities rather than direct real property, so they generally do not qualify as like kind property for a 1031 exchange.

Does a syndication or crowdfunding interest generally qualify for a 1031 exchange?

Generally no. Most syndication and crowdfunding structures generally involve a partnership or LLC membership interest, which is generally excluded from 1031 treatment.

What real estate structures generally can qualify for a 1031 exchange while remaining passive?

Generally a Delaware statutory trust or a tenancy in common interest, both of which may be securities, so introductions are generally made to licensed providers only.

Should every investment path discussed here be reviewed with an advisor first?

Generally yes, this overview is educational only and any specific investment decision should generally involve a financial advisor and, where securities are involved, a licensed securities professional.

Is one real estate investing path generally better than the others?

Generally no single path is universally better, since the right choice generally depends on the investor's capital, desired involvement, liquidity needs, and whether 1031 eligibility matters for future exchange proceeds.

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