How Do You Invest a Small Amount in Real Estate

If you are looking for an investment, real estate can be a great choice even if you have little capital. There are different advantages you will certainly enjoy when you consider this move. You can become the landlord of the property that you have purchased. This is one way on how you can make money out of it. It is also one of the strategies that will help you pay the balance over time. Yes, if you do not have the whole amount for the property you are about to purchase, you can pay a portion of its total cost and then consider settling the balance in the future. Aside from that, here are some of the tips you can consider if you are planning on investing a small amount in real estate:

Real Estate Investment

Buy REITs (Real Estate Investment Trusts)

Cash for homes perceive real estate investment trusts to be something almost similar to mutual funds of stocks. If there is mutual fund for real estate, REIT would be it. Since REIT are being invested in several properties that are related, you can be sure that you will be able to get an opportunity to invest in a residential project or commercial real estate. The good thing is that you will not be a direct investor who holds direct responsibility but a shareholder. One of the advantages of REITs is the dividend arrangement. Aside from that, you will not be paying federal income tax on the money you will be earning. 

Become a Real Estate Agent

This move will help you win in different ways on the future. You are not directly investing on a property but if you consider becoming a real estate agent, you will be able to learn the different processes happening in the real estate market. After getting a license, you can consider joining a local association for realtors or a broker’s office where you can be of help. You will learn a lot from this experience and you will also be able to earn money with a little investment of course. 

Use an Online Real Estate Investing Platform

There are online platforms that connects investors with real estate developers. This is for the people who are willing to finance projects through debt or equity. Unlike stocks, you have to know that that this kind of investment is illiquid. It entails a little risk and you cannot unload them easily. A lot of these platforms are for accredited investors. However, there are also those that are open for those who may ask for minimal requirements that a beginner investor can meet. 

Consider Flipping Investment Properties

Flipping is considered as the wild side of real estate investment. Flippers are not the same with landlords who buy and sell. Flipping means looking for undervalues properties and selling them. There is no need to invest in improvement among flippers. Knowing how to look for a property that already have intrinsic value in it is the key to earning in terms of this strategy. For other flippers, however, the consider buying a property and adding some value through renovation. In this case, it becomes a long term investment. 

Buy Rental Properties to Generate Income

Another practical way for you to earn money in real estate is to buy a property and rent it out. For some people, they would live in the same home and let other people rent some od the rooms. For the others, they consider the Airbnb option. No matter how you do it, investing on property and having it rented out is one of the easiest ways to generate income. 

BRRRR Strategy

This is a bit the same with some of the flipping strategies. But with this, you are going to look for fixer-upper properties to be remodeled. This is the best way on how you can increase their value. However, unlike flipping, you will not sell it. You will keep the property and rent it out. This will allow you to recycle your fund, which will then lead to your accumulation of other properties in the future. 

Real Estate Crowdfunding

This is a new strategy introduced in real estate. With crowdfunding, you will be investing with other people in a company that purchases rental properties. There are also some groups that focuses on giving loans to other real estate investors. The advantage of this strategy is that you can invest just a small amount of money. The catch is that this is a new strategy and the companies are relatively new also. With that, you will not be really sure if your money won’t be lost. The trick is to invest a small amount of money to avoid major losses. 

Investment is always a risk in different fields. Real estate is one of the best area where you can put your money. Being able to identify the best ways on how you will be able to earn money with properties is certainly one of the best business ideas. Always start with something that you are familiar with and do not stop learning. 

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Article Author Details

Matt Guenther