Real estate remains among the safest and most lucrative investment options. Investors prefer real estate ventures since these offer a hedge against inflation and even reap a steady value increase over time. However, investing in real estate can be challenging since you need sizable capital, requiring you to secure funding through other investors or by applying for home loans.
Luckily, investing in real estate properties is possible even if you have a limited budget. Yes, you can invest in real estate with little money by pursuing viable ventures.
How to Invest in Real Estate with Little Money
Real estate investments may seem costly that only entrepreneurs can enter, but that’s not always the case. There are strategic ways to go into real estate investing with minimal resources.
1. House flipping
If you have an eye for spotting property with potential, you may want to consider going into house flipping. Property flipping involves scouting real estate, typically foreclosed properties, and buying them for a fraction of their original price.
Your goal with house flipping is to resell at a higher value after fixing it up and renovating it to be more enticing to potential buyers. Your earnings could then go to your next venture, allowing you to continue the house-flipping cycle.
In Q1 2022, house flipping accounted for 9.6% of all home sales in the US, up by 4.1% from the previous year. So, if you’re interested in house flipping, real estate statistics suggest that now is a perfect time to invest in this endeavor.
2. Real estate investment trust
A real estate investment trust (REIT) is an excellent opportunity to get into real estate without owning or managing the physical property. REITs are companies that own and operate profitable investment properties like malls, apartments, hotels, and more.
These trusts work like stocks, meaning you receive a portion of the earnings regularly as an investor. However, instead of private companies, you invest in publicly listed organizations that operate and profit from real estate investments.
REITs distribute at least 90% of their taxable income to shareholders, making them one of the highest-yielding investments compared to other market opportunities.
3. Co-ownership investment
Co-ownership is a joint real estate investment opportunity you enter into with two or more investors. Typically, your co-investors may be your family, close friends, or other trusted parties.
While relatively new to the Philippines, more investors are looking into this venture due to its affordable mortgage payments, reduced utility costs, and substantial equity growth. The costs are lower since the co-owners divide all the costs associated with being a property owner.
While there’s a lot to consider in managing your investments with multiple people, co-ownership can still be one of your most profitable and inexpensive real estate investment options.
4. Buy and rent
Another real estate investment opportunity that allows you to earn with minimal effort is to buy and rent. Rental properties are a great source of income, allowing you to hire someone to take care of all property management matters. At the same time, you reap the benefits of being a property owner.
When buying and selling real estate property, consider aspects such as property location, rent, purchase price, and renovation costs. These expenditures are necessary to turn out properties prospective tenants want to rent.
Places such as central business districts (CBDs) and university towns are prime locations to look for buy and rent properties since there will always be students or working professionals searching for lodging. This means you’ll have a steady stream of passive income.
5. Buy and hold
Buying and holding a property is worth considering if you’re willing to play the long game and want to get the most out of your investment. Buy-and-hold ventures require you to purchase property and retain possession until it increases in market value.
As mentioned, most turn to real estate investments because these properties can survive financial crises and become more lucrative over time, so you don’t have to worry about sudden price drops. Furthermore, as you wait for your investment to appreciate, you can create a steady income stream by leasing or renting your property.
Buy and hold real estate investment opportunities give you the luxury to earn a bit now and much more later.
The Real Potential of Real Estate
Real estate investments are promising ventures where you can make substantial money by leasing, renting, or holding onto your property. That said, there are still risks with different types of real estate investments, making it crucial to conduct proper research and carefully assess the property you’re buying.
Use this as a guide to investing in the Philippine real estate market with little money.
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