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Alternative Investment

Fractional Real Estate Allows Investors To Apply Dollar-Cost Averaging To Real Estate Investing

Home prices in the U.S. are through the roof. The median home price is more than $400,000 as surging demand and record-low interest rates over the last two years propelled housing prices higher by nearly 30% since 2020. 

While the red-hot housing market is demonstrating signs of cooling amid rising mortgage rates as the Federal Reserve maintains its aggressive stance, housing prices are far from affordable. 

Housing affordability is currently at the lowest level in 30 years. In fact, RenoFi estimates average housing prices rose by 48.55% over the past 10 years, making real estate one of the best alternative investment options. While investing in property might be a pipe dream for most, many passive investment techniques, including crowdfunding real estate start-ups and investing in real estate investment trusts (REITs), can be profitable. 

Dollar-Cost Averaging In Real Estate

The dollar-cost averaging investment technique essentially means recurrently investing a stipulated amount in a particular asset over an extended period. One of the most common examples of dollar-cost averaging is in 401(k) plans where employees and employers deposit a fixed monthly sum into an account.

Though dollar-cost averaging is typically associated with equities, it also has massive potential in the world of real estate. For instance, the Jeff Bezos-backed real estate platform Arrived Homes is making waves in the U.S. housing market. With a minimum investment of $100, investors can have an ownership stake in single-family rental homes.

This model allows you to apply dollar-cost averaging to real estate by investing a fixed amount, even as little as $100, in real estate on a weekly, bi-weekly or monthly basis. The benefit to this is that the stress of having to time the market is eliminated. Your cash-flowing real estate portfolio grows over time and you won’t miss opportunities you otherwise might by trying to find the perfect time to buy.

Looking for ways to boost your returns? Check out Benzinga’s coverage on Alternative Real Estate Investments:

Or browse current investment options based on your criteria with Benzinga’s Offering Screener.

Image by create jobs 51 on Shutterstock

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