How to Get Into Real Estate Investment with Little Money
If you’re reading this article then you must have pretty much made up your mind about investing in real estate in Burbank. As great as your enthusiasm maybe, it’s wise to learn the ropes before taking the dive without one. Real estate investment, like any other financial investment, entails high risks for high returns. It’s better to enter the arena with eyes wide open then just having a vague idea of where your money is being invested. So, without much ado, let’s talk about how to get into real estate investment even if you only have a few thousand bucks in your pocket.
Your Budget
That piqued your interest, didn’t it? It’s true, you don’t have to have thousands of dollars to invest in real estate. Mind you, real estate investment can easily go up to that level, or even hundreds of thousands of dollars, if you’re willing. But we’re talking about normal, hardworking people here, who have limited budget to spare.
Budget is important because it defines the options you can invest in and how you can go about it with the least risks. Know and set your budget before you decide on what you want to do with it.
Your Goals
Now that budget is out of the way, time to evaluate your reason for getting into real estate investment. Sure, most people will say they just want to dip their toes and test the water. But if dipping your toes costs you thousands of dollars, then that’s a very expensive way to go about it; you might as well use your bathtub!
So, why do you want to get into real estate investment? Do you want to invest in commercial or residential properties? Want to create a portfolio and grow through it? Do you want to spread your investment or invest in just one or two properties? Want to invest for the long or short term? Mow much are you willing to risk? How long do you want to stay in this business? Set and focus on your goals even if it’s a trial experience.
Your Knowledge
Assuming you have nil knowledge about real estate investment (because you’re still reading this, aren’t you?), we recommend to study the real estate industry thoroughly, especially the type of investment you want to get into. There are plenty of information portals out there, such as websites, podcasts, articles, and resources for beginners, you’ll be sure to find something to root on. Or, you could call a real estate investment broker for practical and professional advice. Knowledge is power; and in real estate that’s all that matters.
Your Real Estate Investment Options
Now that you are somewhat oriented, and know what you want, let’s analyze your options.
Stocks and Mutual Funds
Just like company stocks, real estate focused funds are also openly traded. They don’t require a huge budget because they’re owned by a company and a bunch of other people, and you can decide however much you want to invest in – a few hundreds or thousands of dollars. This is a low risk and low cost option.
Real Estate Investment Trusts
Like mutual funds, these trusts offer investors portfolio diversification depending on the type of real estate niche you’re investing in. If you feel overwhelmed by the number of real estate companies out there, hire a broker and work with him/her. Again, this is a low cost and low risk option to consider.
Crowdfunded Real Estate
In the recent years, “crowd funding” has really kicked off and appealed to the masses due to its ease and options available. Crowdfunded real estate is no different. You can invest a decent amount with the least risk with a bunch of experienced real estate professionals who pool their expertise and money in the project. With crowdfunded real estate, you’ll be sure to win high returns.
Penny Properties
OK, that was a made up term. The idea came from penny stocks. Penny stock is a term in investment that refers to small public company shares that are traded at very low prices. Similarly, in real estate, sometimes non-usable land or vacant plots are sold at dirt cheap prices because the property is not worth much at the moment. With the right evaluation, and some patience, you can end up with good return on them. This one is a high risk, low cost option.
Real Estate Notes
When you are a bit more experienced (and braver) you can opt for real estate notes. Real estate notes are basically housing debts that are offered by banks at below market rate to help share the burden of the property owner’s debt. This type of investment is for those who don’t want to be involved in the purchase process, yet would like to own properties for high returns.
While there are more options out there, for the low budget real estate investors we’ve listed only a few in this article to get you started. Which one appeals to you and why? Let us know!
