Crypto can make you rich. That is if it doesn’t make you worse off than before. There are safer ways to make money. Hello real estate investing.
Key Points
- Investors who believe in the slow-and-steady-wins-the-race approach might want to learn four methods more likely to build wealth than Dogecoin.
- You might want to put investing in rental property on your radar before interest rates rise, which they are slated to do at least four times in 2022.
- AirDNA, a vacation property research firm, predicts a mixed bag for the 2022 short-term vacation rental market.
When you combine a cute-as-a-button dog, in this case a Shiba Inu, with a get-rich-quick scheme, you’re going to attract some investors, even with a method so seemingly ludicrous it started off as a joke. Of course, I’m talking about Dogecoin, a cryptocurrency started in 2013 as a way to make fun of crypto hype. The creators of Dogecoin based this coin on a meme of a Shiba Inu dog. Largely because of the cute pup, people thought investing in that particular cryptocurrency would be a fun, and fingers-crossed, way to maybe strike it rich.
There have always been and will always be people who like to gamble, and because of crypto’s volatility right now, that’s what investing in crypto is. Investors who believe in the slow-and-steady-wins-the-race approach might want to read on for four ways that are more likely to build wealth than Dogecoin.
Image source: Getty Images.
Rental property investing
This is my preferred method, and it’s served me well. My rentals have provided me with a steady, pretty passive, income stream ever since I bought my first property, a modest single-family home in a location that I believed would take off. And indeed, not too long after I bought the property, Whole Foods announced it would anchor a mixed-use development within walking distance of my rental. Ka-ching.
Although housing prices are sky-high right now, there’s no sign of any major price decreases anytime soon since the supply is so low. And there’s no shortage of renters, particularly if you buy in locations people want to live. So you might want to put investing in rental property on your radar before interest rates rise, which they are slated to do in 2022 — four times, even, says JPMorgan Chase’s CEO Jamie Dimon. By checking into a city’s development initiatives, you can find out what’s planned for an area you’re considering.
Short-term rentals
Investing in short-term rentals is more volatile than investing in long-term rentals, but, traditionally, there’s potentially more income to be made in short-term rentals. COVID-19, however, turned the travel industry upside down. And it hasn’t completely recovered. We can only hope it will return to normal someday. But until then, we wonder what the forecast is for 2022 regarding vacation rentals.
Vacation rentals are most profitable when the economy is strong and people have discretionary income. Many people have that income today (January 2022), but some of that is due to government stimulus payments, which are still occurring but probably won’t last forever. AirDNA, a vacation property research firm, predicts a mixed bag for the 2022 short-term vacation rental market. The company predicts 14.1% growth in demand over 2021 levels, but it also predicts a daily rate decrease of 4%.
Real estate crowdfunding
Some investors, instead of investing in the stock market, pool their money to fund and have access to private market real estate investments. This is called real estate crowdfunding. If the venture makes a profit, you do as well. You might need to pay an annual fee to do this type of investing, and because crowdfunded real estate platforms don’t have to register with the Securities and Exchange Commission (SEC), they don’t carry the same protections as actual property or real estate investment trusts (REITs) do.
REIT investing
Another alternative to investing in either real property or stocks is to invest in REITs, which gives you some diversification with potentially high returns and generally low risk. REITs manage income-producing real estate in a variety of sectors, such as apartment buildings, offices, healthcare and hospitals, shopping centers, warehouses, hotels, and companies with a portfolio of single-family homes. You can invest in REITs through a brokerage.
If you have a taste for rolling the dice, you might want to invest some of your money in one of the many types of cryptocurrency out there. But if you want more of a tried-and-true method of investing, consider real estate by using one (or more) of the methods listed above.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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