Get into the rebounding real estate market safely without a large down payment.

The housing market is on the rebound, but many Californians cannot afford the large down payment required to purchase real estate.  Reuters reported that "the Commerce Department said [new home] sales increased 7.3 percent to a seasonally adjusted 323,000 unit annual rate, the highest level since December, from a slightly upwardly revised 301,000-unit pace in March." (Reuters)  Many people, especially in California, where real estate prices remain high, cannot take advantage of current low interest rates and rebounding home prices. So how can you get in on the rebouding real estate market if you don't already have hundres of thousands of dollars at your disposal for a down payment?

Real Estate Investment Trust (REIT) and Exchange Traded Funds

An REIT is is a tax designation for a corporate entity investing in real estate.  Public REITs are traded on stock exchanges like shares of common stock.  Becoming a shareholder in an REIT is a great way to invest in real estate without the large investment needed to actually purchase real estate.

An example of such an REIT is the Vanguard REIT Index ETF  (VNQ).  With REITs such as VNQ, you will be able to make a limited investment into real estate, knowing you won't lose your house or get into unmanageable debt should the housing market not rebound as expected.  Please do your own research - VNQ is only one example of several REITs that are available, any of which may gain or lose money on your investment in the future.  Charting the last two years of performance for VNQ shows consistent gains, but past performance is not always a good indicator of future performance.

The author, Robert Lee, is not a financial advisor or an expert in the stock market.  This article should not be taken as financial advice and any gains or losses in your investments is your sole responsibility.

Disclosure: Robert Lee owns shares in VNQ.

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