Real estate is often considered to be one of the safest and most lucrative investments. Managed well, it can provide stable cash flow, it appreciates steadily, and offers tax benefits. When the stock market is down, real estate can provide a helpful boost to your investment portfolio.
However, investing in real estate can be pricey. A house is the most expensive thing you will ever buy, not to mention property taxes, the cost of maintenance, and more.
If you don’t have a lot of money, then you may think that you can’t invest in real estate.
Believe it or not, you can invest in real estate even if you can’t afford to buy your own house.
Today, I’m going to explain 3 passive ways you can invest in real estate, even if you don’t have a lot of money.
How to Invest in Real Estate (if you don’t have a lot of money):
1) Invest in REITs
“REIT” stands for “real estate investment trust.” Essentially, it’s when a company owns, operates, or finances an income-producing piece of property.
REITs work by pooling funds from investors to purchase and manage income-generating real estate properties. They generate income primarily through rental payments from tenants and distribute at least 90% of their taxable income to shareholders as dividends.
REITs are publicly traded, like stocks, which makes them highly liquid. So, if you bought a rental property and wanted to get rid of it later, then you would have to go through the whole process of putting it on the market, maybe touching it up, hiring an agent or doing showings, not to mention negations, inspections, and all of the other hassles that pop up when you have a buyer…
Of course, selling too quickly isn’t necessarily advisable since investments need time to grow, but it’s nice to know that it’s possible to sell easily if you need to.
You can buy a REIT for as low as $1,000-1,500.
Like stocks, you can invest in a publicly traded REIT through a brokerage account.
2) Real Estate Crowdfunding
Real estate crowdfunding is a method of raising capital from a large number of people to fund real estate projects.
Through online platforms, investors can contribute relatively small amounts of money to participate in real estate investments that were historically accessible only to larger investors or institutions.
These investments can range from residential and commercial properties to development projects and real estate loans.
Real estate crowdfunding platforms typically provide investors with opportunities to review and select projects, track their investments, and receive returns, such as rental income or profits from property sales, based on their contributions.
Some popular real estate crowdfunding platforms include Fundrise, CrowdStreet, and RealtyMogul (I’m not affiliated with any of these organizations).
3) Real Estate ETFs
A Real Estate ETF (Exchange-Traded Fund) is a type of investment fund that is traded on stock exchanges and invests primarily in real estate-related assets. These assets typically include REITs, real estate development companies, real estate operating companies, and other companies engaged in various aspects of the real estate industry.
The difference between a real estate ETF and an REIT is that a REIT is a single asset whereas a real estate ETF is a bundle of assets. So, a REIT is like going to the farmer’s market and buying a single sunflower whereas a real estate ETF is like buying a bouquet full of different flowers.
The beauty of a real estate ETF is that it provides automatic diversification, which helps protect you from investment risk.
You can invest in a real estate ETF through a brokerage account, just like you would any other stock.
Here's a list of the best-performing real estate ETFs (please note that this is not investment advice and these are not financial recommendations but are for educational purposes only and meant to give you a starting point for your research):
- Pacer Industrial Real Estate ETF (INDS)
- Real Estate Select Sector SPDR Fund (XLRE)
- Invesco S&P 500 Equal Weight Real Estate ETF (RSPR)
- Nuveen Short-Term REIT ETF (NURE)
- JPMorgan BetaBuilders MSCI US REIT ETF (BBRE)
Ready to Invest?
Even if you don’t have a lot of money, you can still become a savvy and successful real estate investor.
If you want to learn our method for successful money multiplier, be sure to check out our free masterclass!
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