Today I was browsing social media as usual to answer questions about money. This is one of my favorite things. My favorite Facebook groups are How to Money and ChooseFI. If you live in the UK, Rebel Finance Group is also a great option. Questions about real estate investing come up from time to time. As a real estate investor with some experience (which means I've made a lot of mistakes), I try to answer these questions to the best of my ability. The investments they want depend on my answer, but I thought I'd educate people about the different types of real estate investments I see and vote for the two I love.
This morning I asked Gemini (Google's AI large-scale language model) how much VTSAX (Total US Stock Market Fund) is in the real estate sector. As of today (February 12, 2024), it is approximately 3.00%. However, this number is a bit misleading, as most public corporations own some form of commercial real estate, and in some cases, rental real estate as well. This can be seen by looking at a company's balance sheet. So if you are on the simple path to wealth, know that you are already investing in real estate and other assets because the businesses you invest in are in different sectors. And, as JL Collins says, funds across the U.S. stock market are self-cleaning. So today, tech funds drive a large portion of the entire U.S. stock market, but in the past it was manufacturing, and who knows what the future holds? It doesn't matter because they don't go in or out of the index.
A real estate investment trust (REIT) is a collection of real estate that is packaged and sold in three typical ways (there are many more, always with different nuances). Listed REITs, Private REITs (eREITs), and Real Estate Syndicates (Not technically REITs, but they are similar. I prefer listed REITs because they are liquid and can be bought and sold on stock exchanges like ETFs and singles. ) stocks. I personally back REITs on places like Fundrise. When you fund a private company, they have a portfolio of real estate in various funds. I have personally invested in Fundrise in the past, but I don't want to do it again. It was sheer luck that I was able to withdraw my funds from Fundrise before 2020, when Fundrise stopped allowing investors to access their funds.
