Real estate is one of those industries that many people say is lucrative, but only a handful truly fits the business. It can be intimidating and overwhelming because the overall perception is that investing in real estate requires a lot of money.
There are quite a few ways anyone can make money in this industry without having to shell out a big wad of cash. Some financial advisors even say you can make money with as little as $500 down.
Three Ways to Fund Real Estate Investments
Your lifelong dream of buying houses and making a profit off can still come to fruition even if you only have a small amount to start. The key is finding the right avenues for funding.
- Seller Financing
Or, as others say, "purchase-money mortgage." Seller Finance works by having the seller loan you the money needed to own their property. The arrangement is relatively common in a situation where the seller needs to unload their stuff quickly. The terms of the loan are also typically arranged directly between the buyer and the seller, without financial institutions or real estate agents.
- Lease Options
Lease options work almost the same as seller financing, except instead of buying the property outright, you make an arrangement to rent the property at a higher rate. The excess amount goes toward the seller's asking price. The premium rental fees can be collected monthly or yearly, depending on your arrangement with the seller. As an investor, this option allows you to own property through higher rental fees.
- Real Estate Partnerships
There's some truth to the adage that you don't have to go through life on your own, even when it comes to owning property. If you're hard-pressed for cash, but you know someone who would be willing to fund your endeavors, you could enter into an equity partnership with them. Do note that there are many possible structures that the agreement can take. However, the risk for loss is higher with this arrangement, so you need to study it thoroughly and clearly define the roles and expectations of everyone involved.
These are just three ways in which you can invest in real estate with practically no money down. You could also look at microloans, home equity loans, or trading houses. You could also look at particular loans by the U.S. Department of Agriculture to encourage people to move to more unpopulated zones or rural areas.
How You Should Invest Your Money
Now that you've got your funding squared off, looking at areas where your investment can yield the highest returns should be next on your list.
- Single-Family Homes
These are the most common types of properties people typically invest in for the long term. It's hardly a mystery since residential rentals have been a common investment opportunity because of their long-term potential. People will always need a place to live, after all. Single-family homes are trendy because they appreciate faster, and they can yield better cash flow in the long run.
- Turnkey Properties
Some real estate companies may wish to unload some of their properties, and if you're starting, these are the best opportunities to watch out for. Turnkey properties are usually properties that are in pristine condition. The company themselves would have already done all the construction and rehabilitation work necessary. If you want a quick and easy way to invest in real estate, this is your best option.
- Airbnb Rentals
The great thing about real estate investments is that sometimes you don't even have to buy a new property to get in the game. If you have room to spare or an empty basement, you can turn these spaces into Airbnb rentals. Short-term rentals are a booming industry since most people find that these are cheaper than hotel stays. The rates you charge will, of course, depend on the state of your rental space. Naturally, the better the amenities you provide, the more you can charge.
Many say that financial freedom can easily be achieved through real estate investments. Follow these guidelines, and you may find yourself going further on your journey to financial security.