Although common investments like stocks and mutual funds may be the first thing that comes to mind when you think about investing, there are plenty of other options out there. In fact, the number of options is increasing as you can easily find and invest in many different opportunities online.
Investments aside from stocks, bonds, and cash are typically considered “alternative investments“. Because this definition only excludes a few types of investments, there are countless possibilities that could fall under the umbrella of an alternative investment.
In this article, we’ll cover more than 20 specific examples of alternative investments, and then we’ll look at some details like the pros and cons, and how much you should invest in alternative investments.
Let’s take a look at many of the most common options. Of course, there are plenty of others out there, but this list should give you a lot of options if you’re looking to get started.
Real estate is one of the most popular investments, and there are many different ways that you can invest in real estate. Here are some of the options that you might want to consider.
1. Rental Properties
Investing in rental properties can be a great choice because it is a proven path that has helped to build wealth for many millionaires and billionaires. You could invest in income-generating assets like commercial properties, single-family homes, condos, duplexes, and apartment buildings.
Landlords make money through monthly rental income, as well as appreciation in the value of the real estate.
Another reason why this is an attractive option is that it can be done on a small scale or a large scale. You could purchase a single rental property or build a rental empire.
For more, please see our article How to Generate Income from Rental Property.
2. Real Estate Crowdfunding
Although owning rental property can be a great way to build wealth, not everyone wants to be a landlord. However, it’s possible to invest in real estate without the headaches and hassles that come with owning and managing property.
In recent years, real estate crowdfunding has opened the doors that allow more people to get started with real estate investing. As an investor, you can reap many of the benefits of real estate without the need to deal with managing the property or tenants, and you can get started with a much smaller amount of money.
There are many different platforms that allow you to invest, and a few different types of real estate crowdfunding platforms. Some platforms allow you to invest in individual properties, while others allow you to invest in portfolios of properties. Most platforms specialize in a particular type of property (such as commercial property, apartment buildings, single-family homes, etc.). Some options are available only to accredited investors and others are available to anyone (you’ll need a net worth of at least $1 million or an annual income of $200,000+ for single filers or $300,000+ for joint filers to qualify as an accredited investor).
Although there are many different real estate crowdfunding platforms out there, arguably the most popular right now is Fundrise. Fundrise is open to all investors (not just accredited investors) and you can get started with as little as $500. With Fundrise, you’ll be investing in a portfolio of properties rather than a single property, which helps to decrease your risk.
REITs (real estate investment trusts) are another excellent option if you want to invest in real estate without the need to own or manage any property. A REIT will own a portfolio of properties and generate ongoing income, which is then passed on to investors.
There are REITs that specialize in all different types of real estate, as well as some general REITs. There are also a few different classifications of REITs as some are publically traded and others are private. Publically-traded REITs offer liquidity since they can be sold at any time, but non-traded REITs will often offer better potential returns in exchange for the lack of liquidity.
Another way to invest in real estate is to invest in farmland. Farmland can be an attractive investment because it produces on-going rental income as well as the potential for appreciation in value.
Crowdfunding has also made it far more possible and practical to invest in farmland, although (at this point) the farmland and agriculture crowdfunding platforms are open only to accredited investors. That means many investors won’t qualify at this time, and higher minimum investments are required.
Acre Trader is one of the leading platforms that makes it easy to invest in farmland. You’ll be investing in a specific property with a cash yield and an anticipated appreciation. The minimum investment will vary depending on the property, but typically minimums will range from about $3,000 to about $10,000.
FarmTogether is another platform that is very similar to AcreTrader.
5. Mobile Homes
Although real estate investing often focuses on apartment complexes and single-family homes, another viable option is to invest in mobile homes. Many mobile homes are located within specific communities where the tenant rents the land that their mobile home sits on, and others are located on privately-owned land.
As an investor, you can own (or own a share of) a community or individual mobile homes. Getting started with mobile homes can require less capital than traditional rental properties since the values are generally lower.