Do you want to get a passive income but don’t have a lot of money in your pockets? Don’t worry! Here’s how you can invest in real estate with just $500!
Most people think you need hundreds of thousands of dollars to invest in real estate. And sure, buying property the traditional way is expensive. However, you can start with much less.
Let’s imagine that you only have $500. You probably think that there is no way you can invest in real estate with just that. But the truth is a bit different. Here are eight ways you can do just that!
Real Estate Investment Trusts (REITs)
REITs are probably the best method when you have as little as $500 to invest in real estate. They are beginner-friendly and almost entirely risk-free. They also don’t require much work or time. The only thing you need to do is to make sure you’ve found a trusted REIT with a good reputation.
An REIT combines funds of investors together to purchase properties. By investing in one, you’re becoming a shareholder who earns dividends as the property generates income. This is quite similar to investing in mutual funds or even stocks.
Crowdfunding is similar to REITs in the sense that it combines the funds from several investors to purchase properties. It involves three key players: The sponsor, responsible for finding and managing the property; The investors, who pay for the capital; And the platform, which connects the sponsor with the investors.
Real Estate Partnership
Partnership means you and another investor combine forces to invest in real estate. This doesn’t necessarily have to mean that you pay 50/50 for the property – considering you only have $500, this wouldn’t do much. However, you might be the one responsible for property management, business operation, or working with the contractors, while the other person funds the most of the deal.
Wholesaling can sometimes be done with even less than $500 involved! A wholesaler finds properties listed for sale for below market value, and then sell them to buyers. They earn money by putting the property under contract at a low price, then selling it to the buyer at a high price. You don’t have to buy the property to resell it this way. You just have to find the seller and the buyer who don’t have the time to deal with the homeselling process.
Microloans are one of the best ways to invest in real estate with just $500. This is a type of loan made in smaller sums, and it can mean a lot for someone who doesn’t have the resources to apply for a traditional loan.
Microloans can be given on peer-to-peer lending platforms, such as LendingClub or Prosper. Here, borrowers access a simplified loan process with more loose eligibility requirements, while peer investors win because fees and high rates don’t eat up their returns.
Turnkey Rental Real Estate
If you thought it was impossible to own rental real estate with just $500 monthly – with turnkey rental real estate, it’s very much possible! Turnkey real estate companies offer properties for purchases, usually in areas where mortgages are cheap. While this means you’ll still have to fin money for the downpayment, the property can cost you very little money monthly, sometimes even less than $500. Not just that, but you can start profiting from the get go if you rent your property to tenants. The check from the tenants could cover not just your mortgage, but you might also profit a bit on top of that.
No matter where you live, you won’t be able to evade property taxes. And when a homeowner doesn’t pay their property taxes, the government can put a tax lien on their property. For a real estate investor, this is a great opportunity. Once the lien is placed upon a home, the government will place it on an auction. You can use this to purchase tax liens for as little as $500. As the debt has to be paid by either the homeowner or someone who will purchase the property, you’re bound to make a return of investment.
Hard Money Loans
A hard money loan can be a great way to get the money you need to invest in real estate. This type of loan can be used for all sorts of things, and not just in real estate. When you are a hard money lender, you are lending the money to a borrower, but under certain conditions. This includes the interest rate, the loan length, and the way in which the borrower will repay you.
While this doesn’t mean you’ll be directly investing in real estate, you can get exposure to the market and earn the money needed to make larger investments.