Investing in real estate is one of the smartest things you can do to put disposable income to work for you. As a long-term investment, very few things are as solid as real estate. Perhaps you’ve shied away from it because you are convinced that investing in real estate requires a small fortune. Guess what? It doesn’t.
You absolutely can invest in real estate with millions of dollars of disposable income. But you can also invest with as little as $100. No, this is no joke. The real estate sector offers a variety of ways to invest. Some require a lot of money while others do not.
Buying Commercial Properties
For the remainder of this post, we will look at four ways to get into real estate investing, beginning with the most expensive option: commercial property. Commercial property runs the gamut from office buildings to retail space.
You don’t have to be able to fund an entire purchase on your own, by the way. Commercial real estate transactions are often financed by hard money firms. Actium Partners, out of Salt Lake City, UT, is a firm that does just that. They say the key to hard money is collateral. If you have strong collateral and enough to cover the down payment, hard money can fund the majority of a commercial real estate purchase.
Buying Residential Properties
Some people get started in real estate by purchasing homes. One might start with a single rental property. Another might go the fix-and-flip route. Some investors even concentrate on vacation properties in hot tourist destinations.
You can invest in a single home by taking advantage of the equity in your current home. You might be able to get a second mortgage. There are even hard money lenders that specialize in the residential market. Actium isn’t one of them, but they are out there.
Real Estate Investment Trusts
The last two options are for those who only have a little bit of disposable income. Let us start with the real estate investment trust (REIT). A typical REIT is a fund that invests in real estate opportunities.
You purchase shares of the fund the same way you would purchase stocks. Fund managers use the money contributed by investors to purchase apartments, hotels, warehouses, and even land for leasing cell towers. Some REITs will let you invest with as little as $100.
How do you make money? Through your share of the returns earned by the fund. Those returns are generated through rental payments and asset sales.
Your last option is to invest in an exchange traded fund (ETF). An ETF is very similar to a mutual fund in principle. ETFs generally focus on a particular industry, investing funds from their customers into other types of funds.
For real estate purposes, you might invest in an EFT that specializes in REIT investments. There is one particular EFT that invests in more than 100 REITs. In doing so, they spread out the risk for investors. And like REITs, small-time investors can get into an EFT with just $100.
Growing Your Money over Time
Regardless of which of the four choices you might prefer, the goal of investing in real estate is to grow your money over time. Theoretically, you could put a few hundred dollars into an REIT, continually rolling over your returns year after year. You eventually might have enough to purchase a rental property.
Real estate is in a league of its own when it comes to long-term investing. It is so profitable and stable that it’s a wonder more people don’t get into it.