There’s a misconception that an investment in real estate requires big capital. This guide will show you how to buy and sell real estate with little money.
On the contrary, this isn’t always the case. There are ways you can invest with little money. It’s the aim of this article to show you how to begin your journey with limited capital.
If you’ve wondered how to go about this, simply relax and read on.
We are confident you’d find practical ways to kick start your real estate investment journey.
Consider Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts are mandated by law to remit as much as 90% of earnings per year! But what are Real Estate Investment Trusts?
These are essentially real estate investment corporations. A Real Estate Investment Trust will either own properties or mortgages.
You also have the freedom of investing in multiple REITs.
However, since we’re talking about limited capital, you’d have to look for those below your investment sum.
Operating an AirBnB
This is an investment option you can start with little capital. You don’t need to own a large property to start.
You only need a room or couple of rooms. These rooms (either single or multiple) can be put into good use by becoming an AirBnB landlord. The good part is your personal effects are insured by AirBnB.
So, can you tolerate strangers? If yes, then this real estate investment option may just be the perfect choice for you.
House flipping has become a reliable way of adding value to distressed properties. Distressed properties are properties under foreclosure order.
How does this work? It is a fact that distressed properties cost much less. House flipping in turn adds value to such properties with the purpose of reselling them. By ‘value,’ we mean renovation.
Although it will cost you to renovate such properties, your investments are recouped with interest after selling such property.
Your renovated property gets to be sold at a higher price. This is typically more than the cost of the property and investments combined.
House hacking has increasingly become an attractive real estate investment option. An added advantage is that it can be started with limited capital.
So, how do you go about it? You need to buy a small multi-unit rental property. A multi-unit rental property is preferable because you only get to live in a single unit. Now, the other units can be rented out.
This is a great idea because you get to recoup your investments with the rent you earn.
As your investments grow, you can move out to make way for more tenants. House hacking can be scaled up to larger multi-unit apartments with time.
This form of real estate investment is ideal for investors with limited capital. Through this arrangement, you get to attract higher investment capital by working with an investor or group of investors.
However, there needs to be concrete structures that guide your business relationships. This should involve written agreements which will help avoid or resolve conflicting interests that will likely occur.
With partnerships, your limited capital goes a long way when combined with those of other investors. Through this, you get to become a part owner of shares that result.
In partnerships, your share of returns is calculated from the capital you contribute.
This, in a way is similar to house flipping. Yet, there’s a major difference. This is in the fact that with wholesaling, a property is bought not with the purpose of renovation.
In other words, you only buy to resell. Distressed properties are cheaper to purchase. After purchasing such properties, you can resell them at a higher rate.
Wholesaling is a great way to invest with little money with significant returns.
Crowdfunding is a great way to commit your limited capital to viable earning opportunities.
As a result of this, such pool of investments from many other investors is channeled into major real estate projects.
Consequently, your earnings are relative to money invested. This idea is a great way to grow your investments. You don’t need a large capital to invest and earn interest in real estate.
Home Equity Loans
Sometimes, there are situations where you owe payments on your property.
As a result, you’d need money to pay or cover the cost of such property. In such situations, there are smart ways to pay off as well as earn from your home.
However, this is only possible if the value of your property is more than what you need to pay on it. This is where home equity loans come handy.
If the value of your home is higher than what you owe, then you can apply for a home equity loan. This offers you a credit line to offset the down payment required for the entire property.
Explore the Hard Money Lending Option
Limited capital may require exploring the hard money lending option. But what is this all about? It basically consists of persons willing to lend you money. But, the problem is interests charged may be high.
However, this can be overcome when you factor in the total rates to to be paid on the money received. This, in addition to your little money will go a long way in enabling you invest in higher, yet valuable real estate investment opportunities.
We’ve seen and discussed the different ways to start investing in real estate with little money. These options have been tested severally with positive outcome.
As a result, such opportunities offer hope and any of these can be chosen. We are confident that with right approach, you’d be able to attract good returns on your investments.