If you’ve ever thought about investing in real estate, you’ve probably heard about some of the hassles that come along with it. With the value of real estate going up in most cases, it is one of the most lucrative investments you can make.
Despite there being no guarantee that property values will appreciate, it can pay off big when you’re in for the long haul. Many investors are able to use their properties as an inflation hedge and for some tax perks.
Quick research will show that investing in real estate requires a decent amount of capital. It might not be feasible for you to purchase a property right away as an investment. Lucky for you, there are several additional ways to smartly invest in real estate that require a smaller amount of money.
Here are seven of those options to get you started.
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1. Invest in a Company
Rather than throw all your capital into physical properties you’ll need to manage, you can invest that money into stocks for a real estate company instead. Many companies focus on building residential homes and commercial space to make a profit. Just like with other stocks, you’ll earn money from dividends on the shares you purchase.
To start, check out Realogy Holdings Corp. (RLGY) and Brookfield Asset Management Inc. (BAM) on the Nasdaq Stock Market. Both companies consist of hedge funds for investing in real estate. RLGY develops residential real estate in the United States, and BAM is focusing renewable energy in their investments.
2. Invest in Trust Accounts
Rather than invest in a company, you can invest in trust accounts that have a place in the real estate market. Your investment will be managed by an investment manager who will help grow your real estate portfolio.
Think of it like you would if you’re investing in art. Instead of investing in an art gallery that buys and sells art, you might decide to trust an art broker with your money. The broker will manage your money to get the best deals to grow your art collection wisely. This, in turn, grows your overall portfolio with diversified assets.
3. Private Equity Funds
This way of investing in real estate is like pooling money with your siblings to buy mom or dad a big Christmas gift. You’ll invest money into the fund, and when a lucrative investment appears on the market, that money will be used to purchase the property. Depending on how large of an investment you make and the price of the property, you could be the majority owner without being the sole owner of the property.
4. Online Real Estate Platforms
RealtyShares, Realty Mogul, and Fundrise are some popular online real estate platforms investors are putting money toward. These portals and more provide an avenue for real estate investors to avoid paying fees to fund managers and brokers.
5. Crowdfunding
Crowdfunding is not new, but it is relatively new in the real estate world. You may be one of hundreds or thousands of investors contributing funds to purchase a property. This strategy allows you to invest minimally if you can’t afford to invest a large sum of money. Some investors invest as little as $1,000 in real estate crowdfunding efforts and receive big, promising returns.
6. Leasing and Renting Commercial Space
Similar to renting a home you own for higher than the mortgage price, you can do the same with commercial space. Whether you lease a commercial property yourself or with other investors, you can find other renters to fill the space and pay a little more than the monthly or annual rent.
7. Home Inspecting
Instead of investing your money in the real estate market, you can invest in yourself to have a career in real estate as a home inspector. Properties that are put on the market require home inspections to identify any red flags that would prevent the home from being sold. You’ll be able to charge premium rates for your service, especially when the real estate market is doing really well.
Whichever method you choose to get started in real estate investing, make sure it’s the right fit for you and your portfolio before diving straight in. When done properly, it’s one of the most rewarding ways grow your wealth over time.
Author’s Bio:
Christine Yaged is a co-founding partner and Chief Product Officer of FinanceBuzz. Christine launches and scales brands. She is passionate about technology, digital marketing, and people.
