Do you have big dreams that involve earning income from real estate investments, but fear that you lack the funds to make your dreams come true? If so, then you are probably like many people who feel that real estate booms have come and gone and left them high and dry. The cost of living combined with inflated property values has left many would-be younger investors wondering if they will ever have enough cash to enter the market. The good news is that there are still a number of tried and true methods of investing in real estate with relatively small sums of money.
Try Your Hand at REITs or Real Estate Mutual Funds
Real Estate Investment Trusts (REITs) allow you to invest in real estate without actually owning the physical property. These investments are frequently compared to stock and bond mutual funds and are typically owned by companies holding commercial real estate like office buildings, hotels, retail spaces, or large apartment complexes. REITs are usually required to pay dividends, making them a smart choice for retirement-leaning investors who want to stretch their dollars.
You can purchase REITs through online brokers, but first you will need to have a brokerage account set up. While REITs are often a good investment, they can also prove a bit daunting for the novice investor. When you are just starting out, publicly traded REITs are probably your best bet.
Rent Out Your Own Home
If you own at least one property and that property is your residence, then congratulations are in order! You are a real estate investor and you probably didn’t even know it. Even if you do not have the cash needed to buy a second property, as a homeowner, you are already sitting on a valuable asset with income earning potential. If you’re looking for a decent return on your investment, renting all or part of your property can be a good option assuming you bought low and rent at a higher monthly rate than your current mortgage, insurance, strata fees, etc. Beware however, that life as a landlord can also be labour intensive. Just talk with any owner who has ever dealt with a non-paying tenant. Eviction proceedings tend to be exhausting and expensive, and oh yes, you will still need someplace to live while your rooms are rented out.
List Your Home Through a Lodging App
Online hospitality sites such as Airbnb and Vrbo offer homeowners in certain areas a relatively simple way to supplement their income with money earned from short-term rentals to vacationers. Successful vacation homes are usually found in major cities and locales that attract a steady stream of tourists. Proximity to major entertainment venues, tourist stops and accessible transportation are all plusses when it comes to successful hosting through lodging apps. Be prepared to keep a tidy, well-maintained property since no one wants to spend time in a dirty home with leaky plumbing while on vacation.
Try an Online Platform or Marketplace
Online real estate investment platforms are part of the latest wave of digital communities that look to connect borrowers with investors. These crowdfunding platforms allow you to buy “shares” in properties but often come with significant minimum investment and net worth requirements. The advantage of investing in real estate through crowdfunding platforms is that you get to skip the hard work of finding, evaluating and managing properties. Somebody else will do the hard work. IMBY is one of the only platforms available to young, enthusiastic investors with small initial outlays in mind. There are no fees to join, no net worth requirements and you only need $1 to make your first investment.
REITs can be lucrative investments, but with their focus on dividends, they are probably best suited for retiree portfolios. Renting your own home to long-term occupants or short-term travellers may bring in money, but there are also expenses and considerable time involved in maintaining a rental property that will attract quality renters. Crowdfunding is the natural progression in an era where many investors are locked out of traditional investment opportunities in real estate due to wildly inflated start-up costs.
With IMBY, you can invest in real estate for as little as $1, making it the most budget-friendly place for beginner investors to dip their toes into the virtual real estate marketplace.