In today’s market, real estate is considered to be one of the safest and least risky investments any person can undertake. Investing in real estate is the equivalent of putting your cash or savings into an asset that will most probably generate (significant) profit for the investor in the short and long term. So, is real estate a good investment for anyone? Probably yes, if we consider that the potential investor is willing to work for it and make it profitable. This also includes the many individuals who want to invest in real estate but don’t have major funds to do so.
In real estate there are so many strategies and approaches to make money on regular basis. The cost of real estate investing doesn’t always have to be high and on the verge of the impossible for some. It is about knowing your limits as well as strengths and using them to make money from real estate. If an investor has $10,000 saved up only, is real estate a good investment for him/her? Absolutely yes, because real estate isn’t about making a lot of money into even more money, it is about what can you do with whatever savings you have. The idea behind real estate investing when you have little or no money is to become richer through the different strategies available to you in real estate.
This is what makes real estate such a diverse and successful investment venture. The fact that anyone can invest and gain profit from their investment no matter how big or small it is. The opportunities can be endless even if you are short on money at the beginning of your real estate investing path.
So, let’s take a look at the specific ways to invest in real estate when you have limited financial resources:
Investing Through Loans or Funding
This is probably the easiest way to answer the question “Is real estate a good investment or not for people with little money?”. Real estate investing is supported by a wide array of professionals and experts: from real estate agents to banks or lenders. The system itself encourages investors to become property owners in one way or another because everyone ultimately benefits from it. This means that if your only obstacle is having little capital to invest in an investment property, then it is time to put those concerns aside.
There are so many banks and lenders that are prepared to offer you a mortgage or loan deal for very low interest rates. The rise of the real estate market has seen interest rates become the lowest in the last decade after the housing collapse of 2007. This means that you as a real estate investor will be able to apply for a mortgage on a property that is considered affordable by your standards.
There are many who worry that applying for a mortgage and having to deal with mortgage payments every month can be catastrophic if there is no extra income generated. However, in real estate nowadays there are so many ways to make that money from the investment property you own through various types of rentals. The idea is to make a decent investment that could pay off its dues in the short and long term.
Related: All You Need to Know About a Mortgage for Rental Property
Wholesaling Strategy
Is real estate a good investment when it comes to wholesaling? Real estate wholesaling has become one of the most popular investment strategies around because it doesn’t require too much capital or funds to begin with. A wholesaler is a person who gets profit from finding real estate deals. The wholesaler basically goes to find a property for sale and signs a legal contract with the seller for a particular price. Then the wholesaler will find a buyer to sell to him/her the contract that he/she had signed previously for a set fee. The amount of the fee will depend on how good the deal is, the property, and its location.
The real estate wholesaling strategy is not costly at all because all the wholesaler would be doing is becoming the middleman in the deal. That happens through bringing a buyer and a seller together, then getting a cut of the deal that happens between the two parties. The only expenses that a real estate wholesaler would incur are considered to be the marketing costs to advertise the property, which could also be done through networking to find the best deals around. If you have little money and are looking to get into real estate investing, then wholesaling would be a great way to start.
Related: Is Real Estate Wholesaling a Good Idea for Beginner Investors?
Finding a Real Estate Investing Partner
Another great option into real estate investing is forming a partnership with another investor. This is considered like putting two pieces together to form a whole, and in the case of real estate, to purchase an investment property that will benefit you and your partner financially. Real estate investing partnerships is another great answer to the question “Is real estate a good investment for people with little money?” simply because you wouldn’t have to suffer its costs all by yourself.
When you have a partner in real estate investing, that removes a lot of the constraints which you face otherwise. A real estate partner will share the investment cost with you, making it easier for you to become an investor. But more importantly, a partner will also help you manage and grow your investment property if you ever find it hard to maintain it yourself.
Lease-to-Buy Option
Leasing a real estate property with a buy option is another way of getting an investment property when you are short on funds. A lease to buy option basically gives you the chance to have an agreement with a seller to move into his/her property and live there as a tenant with the option to buy the rental property at the end of the lease agreement. This type of real estate investment strategy is like a lifeline to give you more time to save up the money you need to make an investment. Many people who have little to no money saved find this strategy very appealing because it provides them with a home, more time to save money, and ownership of a property at the end.
Related: Lease to Own Option and its Pros and Cons for Buyers and Sellers
Conclusion
The answer to the question “Is real estate a good investment for people with little money?” is not a complicated one. There are so many options and strategies in real estate that allow you to invest even when you are unable to save money like other investors. The key to success in real estate investing is to learn more about the various investment strategies, find the one that suits you best, and execute it well to allow you to grow your profit with minimal risk.
For more advice to existing and future real estate investors, sign up for Mashvisor.
