Berkshire icon Charlie Munger believed homeownership is for families who want to live in them — not single people. Here’s how to invest in real estate without buying a home

Munger: Homeownership is for families

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Charlie Munger was an investing magnate whose life spanned multiple decades. He died at age 99 on November 28, 2023. His legacy is truly iconic, having built several incredible companies over the years — most notably Berkshire Hathaway — alongside the Oracle of Omaha himself, Warren Buffett.

Munger’s mix of humor and profound insight in simplifying complex concepts into sayings that people can understand still resonates with so many investors.

Among Munger's well-known views is that homes should be reserved for families who intend to live in them. At the 1998 Berkshire Hathaway Annual meeting, Munger famously quipped, “The single people, I don't care if they ever get a house."

Regardless of marital status, real estate remains one of the best wealth-building assets for middle-class families. Approximately 45% of household net worth in America is tied to primary residences, with an even larger percentage linked to real estate investments.

Here's what investors should consider about real estate as a long-term asset class.

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Plenty of opportunities to consider

For most individuals, the most significant investment one will ever make is in their primary residence.

The ability to take on a highly leveraged position in real estate and grow equity as property values rise over time offers significant financial benefits. Instead of paying rent and having ‘nothing’ to show for it after 30 years, homeowners who make their monthly mortgage payments will accumulate substantial equity by retirement. This "forced savings" phenomenon is a key reason why most household net worth is so often tied up in real estate.

There are several options for those looking to expand their residential real estate portfolio beyond their primary residence, or invest in real estate while saving for a down payment on their own home.

For instance, Cityfunds allows you to invest in residential properties in top U.S. cities — like Denver, Austin, Nashville and Miami — without having to drain your bank account to put a downpayment on a home.

Here’s how it works: The company allows investors to invest in diversified portfolios of owner-occupied homes. In exchange for the cash, Cityfunds secures an interest in the home's future value. As the home value appreciates, so does the value of Cityfunds equity investment alongside the homeowner.

So you can invest in the housing market of a city you love for as little as $500.

Don't overlook commercial options

After establishing a diversified residential real estate portfolio, you might seek additional investment opportunities for further growth. Commercial real estate has been one of the best-performing asset classes in recent decades, often offering higher appreciation and cash flows compared to residential real estate. Consequently, many investors turn to commercial real estate after purchasing their home.

One option for accredited investors is First National Realty Partners (FNRP), a top platform for individual investors seeking access to commercial real estate deals typically reserved for institutional investors.

FNRP is rapidly growing and offers institutional-quality properties leased by blue-chip retailers who are integral to their communities.Investors benefit from a triple net (NNN) leasing structure, which can ensure stable cash flows even during economic turmoil. This structure protects investors from rising tenant costs, which is particularly advantageous during periods of high inflation.

FNRP’s team of experts manages every aspect of the investment life cycle, from due diligence and leasing to property management and value enhancement. This comprehensive management can result in increased cash flow and greater returns over time — a winning combination for investors.

Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead

Private real estate funds

With private equity real estate funds, you can get access to a wide range of different real estate investments, such as residential, commercial or real estate debt, meaning you aren't keeping all of your money tied to the fortunes of a single property.

With Fundrise, you can invest in several different real estate funds, each calibrated for consistent growth. Fundrise's real estate funds include a wide range of assets, including residential and commercial properties and real estate loans, ensuring diversification within your portfolio. Unlike most private real estate funds, which require institutional-level capital to get into, Fundrise has a minimum investment threshold of $10.

You can start investing with Fundrise by signing up and answering a few questions about yourself and your investing preferences and risk tolerance. Then Fundrise will suggest a portfolio best suited to your goals

Real estate ETFs and stocks

Investing in REITs or ETFs will give you access to the growth of the real estate market through the stock market. There are also a number of funds that offer diversified exposure to different types of real estate assets, so you can spread your risk and ensure balance in your portfolio. These assets can include residential, commercial, and industrial properties.

Even with a diversified investment in real estate funds, you’ll want to make sure you’ve got the right strategy and research behind you.

The team of former hedge fund analysts and experts at Moby spend hundreds of hours each week sifting through financial news and data to provide top-tier stock reports to keep you up-to-date on what’s moving the markets.

Moby’s superior research can help you reduce the guesswork when selecting stocks and ETFs. In four years, across almost 400 stock picks, Moby's picks have beaten the S&P 500’s returns by almost 12%, on average.

With their jargon-free formats, you can become a wiser investor in just five minutes, backed by a 30-day money back guarantee.

However, reliable advice isn’t the only thing you’ll need to become a real estate mogul.

Great money makers need great tools, and that’s where Public comes in.

Public not only offers commission-free trading but also provides a high-yield account where you can park your cash between investments. Public also has social features, enabling users to follow and learn from other investors, share ideas, and stay updated on market trends with real-time insights.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.