There’s no doubt that real estate is a great investment. Investors can enjoy a ton of benefits such as numerous tax advantages, stable income, a high rate of returns, and a diversified portfolio. Anyone can become an investor, even those who are on a budget. While there are many investments that start with a costly initial fund release, those with a limited budget still have several real estate investment options to choose from. These investment alternatives range from sharing the investment with a partner to flipping houses. If you’re among those wanting to get into the real estate market but with only average means, options provided in this article could work for you.
Investing in real estate requires more than your usual bank savings. Properties worth putting your money in may range from a few hundred thousand dollars to the millions. Then again, there are many alternative venues for getting into the real estate market, especially for those with a limited budget.
Check out these budget-friendly real estate investment options:
- Finding a partner to invest in real estate
Investing in real estate can be financially challenging if you’re doing it alone. That’s where a real estate investment partnership becomes a great idea. With two real estate entrepreneurs, there’ll be more knowledge, experience, and resources brought to the table. Profits and losses from your joint real estate investment will be shared, as well.
If you do decide to pursue this investment strategy, make sure to get into a real estate partnership agreement with someone you trust. Only then can you proceed with your endeavor.
- Real estate investment trust (REIT)
Another budget-friendly way to invest in real estate is by putting your money in a real estate investment trust (REIT). Defined as a company or corporation that owns and manages real estate properties, a REIT is known for its accessibility, low entry costs, and strong dividend income.
Most REITs are publicly-traded companies that are required to distribute 90% of their taxable income to shareholders. Shares can be purchased through a broker, a REIT mutual fund, or a REIT exchange-traded fund.
- Real estate wholesaling
If you’re on a tight budget, real estate wholesaling may be the best option for you. This real estate investing method can help you make money quickly without the need to make an offer or a down payment.
During this process, the wholesaler will find a property being sold (typically distressed properties), sign a contract with the off-market seller, and look for an interested buyer before the contract expires. The home will then be sold to the buyer at a higher price, with the wholesaler keeping the difference.
Wholesaling may be one of the cheaper real estate investments to make but it requires much time and effort. As the wholesaler, you are tasked with finding, obtaining, analyzing, and marketing the property.
- Flipping houses
Flipping homes can be very rewarding, especially if done right. These properties, sold at a much lower price, can make large profits and provide valuable experiences. That’s why it’s important to choose a home with the most potential. Structurally-sound homes in great locations are the type of properties to go for.
- Turning your home into an investment property
Investing in real estate can start right at home. Renting out your property comes with plenty of benefits such as steady cash flow, tax deductions, and sweat equity. If you have an extra property or a home that’s been on the market for a significant amount of time, consider renting it out instead.
- Lots and raw land
Generally cheaper than existing homes, lots and land are great real estate investments for those on a budget. While these types of properties rarely generate rental income, the cost of holding and maintaining vacant land is much lower than that of a rental home.
- Investing in a turnkey property
Turnkey homes refer to fully-renovated properties that can be purchased and rented out immediately. Since turnkey properties require minimal time, money, and effort, these are perfect for those who are new to investing in real estate.
- Private lending
Another way to invest in real estate on a tight budget is through private lending. When a group or individual is in need of funds for their real estate project, a private money lender steps in to provide the necessary finances.
If you plan on becoming a private lender, the best types of people to help are fix-and-flippers, buy-and-hold investors, and short-term and long-term investors.
- Investing in real estate education
If you’re looking to build long-term wealth, getting formally educated in real estate is the way to go. A real estate education gives you the knowledge to confidently navigate the challenging real estate industry and create more opportunities. Think of this as an investment in your future.
To start on your academic journey in real estate, look for online classes or visit your community college for available courses. Classes of this nature are beginner-friendly and in-depth. Books, blogs, and podcasts can also be great informal sources of real estate information and education.
Are you ready to start investing in the Chicago housing market? Let 606 Brokers help you out. Our team has over 30 years of combined experience in helping clients to make informed real estate investment decisions. Get in touch with us at 606 Brokers today by calling 773.870.5101.