How to invest in real estate with zero or little money
Real estate investments need a massive amount of capital. It can be daunting, particularly for young investors who start out small with little money.
Compared to other forms of investment, real estate has little liquidity. People often hesitate before investing in real estate as it is cash flow dependent. However, investments need a strategy, and real estate investments are no different.
Top businessmen and investors will not tell you, but investments can work if you have a little money saved. You need to understand how to make the best of your resources when investing in real estate. Not everyone will have capital ready. It is why people have come up with alternate strategies to invest in real estate.
Here are the top 8 ways you can invest in real estate with very little money:
Real Estate Investment Trusts (REIT) – REIT is a disruptor in real estate investments. Aimed at small and mid-level investors, REIT provides a minimum of 7-8 percent annual return. The Real Estate Investment Trust gives investors long-term financial growth. You can invest in real estate as an asset class and earn returns from dividends.
According to the guidelines of REIT, an investor should invest 80% of the value in revenue-generating assets. The remaining 20% can be used for under-construction projects. REIT has better liquidity, and you can choose specific buildings. For instance, you could invest in property that plans to open a mall or a school.
Fintech platforms for investment – The recent boom in fintech has made investments more accessible to small investors. These online platforms pool money and allow you to invest in assets that were previously out of your budget. Online platforms are convenient if you’re in it for the long term. You can avail a wider range of property types and investment minimums.
Trade Houses – Trade houses help you invest in real estate with little or no money. Selling a property that is cumbersome due to its capital gains. Trade houses remove this disadvantage as you trade an old property with a new property.
SBA 504 loan – The SBA 504 loan provides support to small businesses. If you want to buy any commercial real estate, the SBA 504 loan is perfect. You only need to pay a 10% down payment, and the funding can extend up from a hundred thousand dollars to 20 million. With this loan, you can do more than invest in a real estate property. You can also finance the construction of real estate with this loan.
Buying properties in small towns – Real estate in top tier cities are expensive. It is inaccessible to people with little money to invest in real estate. Instead of worrying about properties in tier-1 cities, consider small towns. Small towns are also expanding and have several construction projects underway. By buying property in a small town, you can save considerably on your capital. You will need to do some research of your own for buying real estate in small towns. Take into account factors like location, connectivity and speed of urbanization before making decisions.
Partnerships – Partnerships are ideal for investing in real estate with little money. An equity partnership might be the answer to your problems. In an equity partnership, you can team up with an individual to finance real estate. Equity partnerships are built on terms that you can decide before entering the partnership.
Microloans for real estate investments – Microloans come in handy for investing in real estate with little money. Small businesses and startups can easily access microloans without much hassle. The loan offered is less as compared to traditional financial institutions like the bank. However, you don’t need stringent rules with a microloan and can get away with things like a low credit score.
Lease as a real estate investment strategy – You can invest in real estate with little money by leasing the property. With this option, the real estate owner can charge a higher rental on a monthly or annual basis. The additional rental price can then be allocated to cover the capital needed for the property.
Conclusion: Can you invest in real estate with zero or little money?
The answer is yes – you can invest in real estate with zero or little money. If you’re a small investor, your goal must be to find alternate solutions to your problem. By using the money of others, for instance, like a loan, you can easily invest in real estate with little money.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
