Investment Strategies How to Start Investing in Real Estate with $500 by Alex Karani December 23, 2020December 23, 2020 by Alex Karani December 23, 2020December 23, 2020 When done right, real estate investing can be a great path to earning huge returns and building wealth. Most millionaires achieved their wealth through real estate investing. But for many, real estate can be an intimidating investment. One of the most common misconceptions that people have is that it takes a huge amount of money to start investing in real estate. This is mainly because most people only think of real estate investing in terms of owning a rental property or flipping houses. But you can actually become a real estate investor without purchasing a physical property. The truth is that, in this day and age, it’s possible to begin investing in real estate with $500 or less. While you won’t make millions immediately, it should get you on the right track. Read on to learn how to start investing in real estate with $500. Related: Buying Rental Property with No Money Down: 10 Ways It’s Possible 6 Ways to Get Started in Real Estate with $500 1. Invest in REITs If you have been wondering how to start investing in real estate with $500, one excellent way to do it is to invest in real estate investment trusts (REITs). REITs are companies where multiple investors pool funds to invest in a real estate portfolio that they may not be able to invest in individually, just like mutual funds or stocks. This allows you to invest in real estate without necessarily owning physical property. REITs often specialize in one type of asset especially commercial real estate like apartments, office buildings, retail spaces, industrial property, and hotels. They generate income by renting, leasing, or selling investment properties, which is distributed to shareholders as dividends. Investors can use or reinvest their dividends to grow their investment portfolio. If you have a few hundred bucks to spare and want a hands-off real estate investment strategy, REITs can be a great option. 2. Real Estate Crowdfunding You can also add real estate to your portfolio with as little as $500 through real estate crowdfunding platforms like Fundrise. Real estate crowdfunding platforms allow you to invest in different types of real estate online. Instead of a single investor buying an investment property, a number of investors pool their money together to fund a real estate project and work with experienced investors who invest that money. The company does the work of finding and acquiring real estate deals. You are paid dividends without doing any of the work. The downside of investing through real estate crowdfunding platforms is that they will tie up your money. Your investment in the platform will not be as liquid as it would be if you invested in REITs. However, unlike REITs, you have more control over what real estate deals you invest in. This enables you to diversify your portfolio with relatively little money by investing in a variety of deals. Real estate crowdfunding could be a good way for small investors to get involved in real estate markets that were traditionally available only to wealthy investors. While it is a lucrative option for a beginner real estate investor, you need to do your due diligence to ensure that you are investing with a legitimate company that is also a good fit. For instance, you’ll want to know their minimum investment amount, their fees, their experience in the business, and their guidelines for investors. Related: The Best Real Estate Crowdfunding Sites 3. Invest in Real Estate Limited Partnerships (RELPs) A real estate limited partnership is one way to invest in real estate with $500. Another great option for how to start investing in real estate with $500 is to partner with other investors. Much like REITs, real estate limited partnerships allow groups of investors to pool their funds to invest in real estate. A real estate partnership usually has a general manager who handles direct management of the investment properties and assumes full liability. The rest of the investors are limited partners who are liable only up to their actual investment. They have limited involvement and influence in the management of the real estate limited partnership. They only contribute money in exchange for an investment return. A real estate partnership allows you to invest in a diversified portfolio. However, investors need to do their due diligence since this strategy is associated with high risks. Also, keep in mind that funds invested in a RELPs typically are illiquid. Related: What You Need to Know About Real Estate Partnerships 4. Real Estate Wholesaling You can be a real estate investor with little to no money by wholesaling real estate. Real estate wholesaling involves entering into a contract with a property seller to purchase their property and later reassigning the contract to prospective buyers. However, real estate wholesaling can be a risky business if you fail to find a buyer before the contract closes. You may need a few hundred dollars to market the property to potential buyers so that it sells fast. Related: The Basics of a Wholesale Real Estate Contract and How to Prepare One 5. Rent Out Your Spare Room on Airbnb If you’ve got a spare room in your home, you can get started in real estate with $500. You could rent your spare room via Airbnb, the most popular vacation rental online marketplace. For $500 or less, you can make improvements to make it ready for guests and start earning some extra income. However, the location of your house will have a huge impact on potential returns. Be sure to also check the local short-term rental regulations. It should also be in an area with a high demand for short-term rentals. These are usually areas that are frequented by tourists and business travelers. 6. Buy Real Estate Investment Software and Become a Property Locator There are real estate investors that will pay you for finding deals for them. But you have to be able to find great deals that the investor wouldn’t come across themselves. The best way to do this? Buy real estate investment software. You might be thinking that the necessary software would be beyond the budget of $500 but Mashvisor offers a few different plans, and this one is within your budget. For that price, Mashvisor offers a number of real estate investment tools that every beginner real estate investor should use. You’ll be able to quickly identify investment properties for sale with a high ROI and present the full investment property analysis to your real estate investor lead. Facilitating a few deals will allow you to start saving up money for a down payment on a rental property. Learn more about becoming a property locator here. The Bottom Line Are you waiting to get thousands or hundreds of thousands of dollars to invest in real estate? Well, you don’t have to. Real estate investing is not just reserved for the ultra-wealthy. There are several ways to invest in real estate with $500. If you have $500 or even less to invest, you should consider one of the above real estate investment strategies. Start Your Investment Property Search! START FREE TRIAL AirbnbCrowdfundingInvestor ToolsPartnershipsREITsWholesaling 0 FacebookTwitterGoogle +PinterestLinkedin Alex Karani Alex is an entrepreneur and an experienced content writer focused on personal finance, business, and investing. For over six years, he has contributed to a number of publications, both online and print. When he's not writing or working, Alex enjoys reading, traveling, and the outdoors. 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