Growing and diversifying a portfolio is the best way to grow your personal and generational wealth. There are so many ways to diversify, there’s no need to only search for real estate — especially when home prices are up more than 15% and the market is facing down the barrel of a decline. From stocks to franchises to overlooked commodities and valuables, there are more ways to invest than just real estate. Looking for investment opportunities beyond real estate? Here are six great real estate investment alternatives for 2022 and what it takes to get started.
This one seems like a big leap for some investors, especially if you’re used to the idea of owning what you’re investing in. Peer-to-peer lending is one of the best low-risk investment ideas and one of the best real estate investment alternatives. Just as it sounds, peer-to-peer lending lets people borrow without going through a bank. For borrowers, this can mean lower interest rates, and for lenders, you may have a quicker return on your investment, and default rates are usually higher, so you’re likely to make more money.
This may be one of the most fun ways to invest, and one of least talked about real estate investment alternatives. If you have a hobby or interest, there are often ways to turn that into investment opportunities. For example, a lot of people have started investing in wine. You can buy bottles of wine, hold onto them for a period of time, and then resell them when their price inevitably increases. There are also wine stocks you can buy to support flourishing businesses. For the most part, this is one of a few low-risk investment ideas, and it’s actually pretty fun. There’s so much money to be had, people have found ways to defraud it. The documentary Sour Grapes showcases how wine can be an investment opportunity for many, and why you should be careful.
If you’re more of an art or coin collector, there is money to be made in both. These are long-term, low-risk investment ideas. Investing in collector’s items does require a good amount of research, so you have to be willing to put in the work. And, there are more obscure collections that can be investments like sports memorabilia or even Pokémon Cards.
If you’re looking for a quicker return on your real estate investment alternatives, a franchise may be right for you. With a franchise investment, you get to benefit directly, have more control over your investment, be more involved, and see a quicker return.
If you’d bought a Scooter’s Coffee franchise last year, you could have seen more than a 24% year-over-year sales growth**, more than a 26% net profit margin*, and an average of $310,231 in earnings before interest, taxes, depreciation*, according to our most recent Franchise Disclosure Document. Although we cannot predict or guarantee similar results, it’s safe to say that franchises are a quicker way to make money off your investment, since the company itself has a stake in your success.
Franchisees are given proven tools, business models, training, and more to be successful in their sales. Scooter’s Coffee even provides centralized supply chain and distribution, taking a burden off franchisees. The support given from the franchisor is one of the main reasons a franchise investment is one of the finest low-risk investment ideas. You can also increase your portfolio rather easily with the same business. Once you’ve mastered opening one franchise, franchisors will often give you discounts and incentives to open more locations.
While every business venture has its share of risks and rewards, there are franchises that have proven business models and big backing from the franchisor. Weigh your own risks and rewards.
If you’re not able to open up an entire franchise on your own or you don’t want that much responsibility, creating a partnership is another way to make money in a franchise investment. Being a partner and helping with the initial capital is a way to invest passively.
So, this option is still something of a real estate investment, but it’s a great alternative because it’s not actual property. REIT stands for real estate investment trust. It’s essentially real estate stock. Big corporations have large real estate portfolios, and you can invest in those properties and mortgages. It’s a way to have a real estate investment without being as hands-on or being a property manager. These historically have a very high return each year and are some of the easiest real estate investment alternatives. In fact, because a REIT can grow over time, the dividends and returns do too.
Precious metals are a way many people are looking to invest after the pandemic, according to investment firm Morgan Stanley. It’s another low-risk way to invest for uncertain futures. They tend to be a little more resilient to recessions and economic declines. Silver is a bit more capricious than gold but is more ingrained in the world’s economies than gold. However, gold is the standard and usually more resilient to whatever the stock market and economies are doing. Both are low-risk investment alternatives that can pay out over time and a great way to diversify your portfolio. Heck, gold or silver can even become a money-making hobby if you start collecting it.
You can invest in U.S. treasury notes, bills, bonds, TIPS (Treasury Inflation-Protected Security), and floating rate notes rather easily. The purchases can be made online. These investments are safe, secure, low-risk, and passive — mainly because they are backed by the full faith and credit of the U.S. government. Interest and principal payments are guaranteed, and guaranteed to be paid on time.
There are a few differences in each, so you’ll need to compare and contrast what is best for you. Older bonds tend to offer higher interest rate payments, while younger ones are likely to have lower yields.
Regardless of how you’re investing, diversifying your portfolio is a way to build wealth for you and your family. Not only does it reduce risk for any one investment, but can increase your earning potential faster.
Circling back to that franchise idea, Scooter’s Coffee offers a chance to invest in a booming business with a history of success. We have 400+ locations nationwide, with hundreds more in development. We make sure your location isn’t too close to others’ territories, and we do extensive market research to give you the best chance for success. Our small-footprint kiosk models are convenient for consumers and mean less labor hassles for franchise owners.
*This is historical representation of what some of our franchisees have earned as described further in Item 19 of the FDD. This information is based upon the top 43 of 172 Drive-Thru Kiosks that were open during the entire 2021 calendar year and provided complete information. Of these 31 Drive-Thru Kiosks that compile the top quartile: (1) 17 of them (or 40%) had an AUV that met or exceeded $1,179,980, (2) 19 of them (or 44%) had a Net Profit Margin and EBITDA that met or exceeded the average. Your results may differ. There is no assurance that you will sell or earn as much. See Item 19 of the FDD for more information.
**This is historical representation of what some of our franchisees have earned as described further in Item 19 of the FDD. Same-store sales growth compares net sales (gross sales minus discounts and refunds) in calendar year 2020 to net sales in calendar year 2021. This information is based upon 217 locations that were open during the entire 2021 calendar year and provided complete information. Of these 217 locations, 112 (or 51.61%) of them had Same-Store Net Sales Growth Over Prior Year that met or exceeded 24.32%. Your results may differ. There is no assurance that you will sell or earn as much. See Item 19 of the FDD for more information