Real estate investing doesn’t require for you to have hundreds of thousands of dollars to put down on a property. You can use leverage to start investing with a smaller amount; some properties ask for as little as 5% for the down payment. Here are other simple ways to grow your investments.
Real estate investment groups
If you don’t want the responsibility of managing a property, REIGs are a good option for you to invest in real estate. REIGs operate in a way similar to mutual funds. The company buys and manages properties for the investors in exchange for taking a percentage of the rental income. You could own one or multiple units in rental properties without having to deal with the stress of managing it.
Real estate investment trusts
REITs function like stocks: You can buy and sell them on the stock exchange. Corporations and trusts must pay at least 90% of taxable profits in the form of dividends to investors. REITs avoid corporate income tax, which helps them consistently pay dividends.
Real estate crowdfunding
Crowdfunding is another way you could begin investing in real estate at a lower cost than buying a rental property by yourself. Investors pool their money together to buy or develop a property. There are options to invest in a portfolio of projects as well as single projects. A drawback to consider before real estate crowdfunding is that many projects lock your money for a few years. It’s also riskier than the previous methods of real estate investing because there are fewer regulations.
The three simplest ways to start investing in real estate are REIGs, REITs and crowdfunding. Each option has its pros and cons, so you should consider which is best for your risk tolerance, goals and personal preferences.