Buying A Home Investing

3 Ways to Start Investing in Real Estate for Cheap

If you don’t want to own a rental property or invest with a group in a condo or apartment complex, crowdfunded real estate might be a great investment option for you.

Real Estate Investment Trusts (REIT)

Another great option to allow you to invest in real estate very cheaply is by investing in a real estate investment trust (REIT). A REIT is very similar to a mutual fund. Like a mutual fund, you can buy shares in a REIT on all of the major stock exchanges.

You can find a REIT that specializes in almost any type of real estate that you want to invest in buy maybe wouldn’t normally get the chance to participate. You can invest in REITs that specialize in shopping malls, large residential subdivisions, commercial properties, condos and apartment complexes, and a host of other types of real estate. There are other REITs that are diversified and invest in several different types of real estate.

Like mutual funds, many REITs have low minimum investment requirements. You can also dollar cost average and invest a set amount each month in a REIT just like you would a mutual fund or an ETF.

One of the best advantages of a REIT is that the investment company, which manages and owns the REIT must pay out 90% of its profits as dividends to shareholders every year. REITs are an excellent source of income for investors looking for another income stream.

Rent Out a Portion of Your Home

Another way that you can invest in real estate for little or no money is to rent out a portion of your current home. Renting out a section of your home is an easy way to ease into the real estate investing world.

If you have an extra bedroom in your home that you’re not using or a basement even, you can rent that out to someone and test the waters of being a landlord. The test will let you see what it is like to screen tenants, deal with issues, collect rent, and ultimately maybe have to evict tenants.

You can also ease into this portion of real estate investing using Airbnb. Airbnb makes it easy to rent out a portion of your home or your entire house to visitors. You might not consider this typical real estate investing, but it is a way to get your feet wet and make your real estate earn you an income for very little expenses out of your own pocket.

Airbnb has a built-in system and platform to help you find and screen out tenants. It helps you collect payment for the nights people stay in your house, and it gives you a lot of flexibility.

So, start with a spare bedroom or your basement. Renting out just a small space in your current home can be a great way to ease into real estate investing. Who knows? Maybe this trial will morph into an investment in a second home at a vacation destination that you rent out more consistently. You never know where these test will take you.

Investing in a rental home near where you live isn’t for everyone. You don’t have to have a large pool of capital or hefty mortgage to start investing in real estate. You can cheaply invest in real estate, and the type of real estate that interests you the most if you look at other options such as crowdfunding websites, REITs, or simply renting out a room.

Have you tried investing in real estate for cheap? How did you start investing? Are there other ways to invest in real estate with little capital up front?

About the author

Hank Coleman

Hank Coleman is the publisher or the popular personal finance blog, Money Q&A. He’s also a freelance journalist specializing in retirement planning, investing, and personal finance. You can also find him on Twitter @MoneyQandA.

Leave a Comment