Investing in Real Estate

This blog post was written by SAC member Jawahir Mohamed

Navigating real estate investment can pose challenges, especially if you're working with limited resources. However, it's important to recognize that challenges don't negate the possibility of success. This blog article serves as a comprehensive guide for individuals interested in real estate investment, regardless of their financial situation. These options provide possible pathways, but it's crucial to note that we aim to present options, not dictate specific actions. For a more tailored and practical guide, consider consulting a financial advisor. With that in mind, let's delve into the topic.

For those who are interested in investing in real estate with little to no money, here are some options:

Real Estate Crowd Funding

Real estate crowdfunding involves pooling funds with a group of individuals who share an interest in real estate investment. If you prefer not to be directly involved in the property acquisition process and lessen any responsibilities, you can become part of a group and contribute your available capital. On the other hand, if you are prepared to take on this responsibility, real estate crowdfunding can serve as an excellent entryway point, especially if you have prior experience or knowledge in the field.

Seller Finance

Another option worth exploring is seller financing. Seller financing involves approaching a homeowner and negotiating an arrangement where they sell you their property through monthly rent or payments. This approach resembles a conventional bank loan, but it can come with higher interest rates since the buyer is taking on more risk by negotiating with you directly. Nonetheless, if you can identify a right seller, this method can offer a relatively sure way to acquire a property without the bureaucratic hurdles normally associated with traditional bank loans.

Asking Family and Friends

And lastly, if you feel comfortable and have people in your life who have the means, it may be worthwhile to consider approaching family or friends for a loan to kickstart your real estate investment journey.

On the flip side, if you do have money to put toward real estate investments, some of your options may include:

Becoming a landlord

To become a landlord, you must first own the property you are about to rent out. Once you have a property, you can begin to look for occupants. Being a landlord offers the potential for generating passive income with minimal effort, aside from occasional maintenance tasks that may be necessary. You can create a one-year or two-year contract for your occupants, ensuring that you will have income during that time, which can help offset an uncertainty surrounding finances.

Real Estate Investment Trusts

Additionally, you have the option to invest in a real estate investment trust (REIT), which allows you to become a property owner and investor without the burden of property management. REIT holders essentially get a share of the income generated by the real estate investments, much like owning stocks in a stock market. REITs generally fall into two categories: equity REITs and mortgage REITs. Equity REITs own residential and commercial properties, with their profits primarily deriving from rental income. Mortgage REITs, on the other hand, generate their income from the interest earned on the mortgages they hold or mortgage-backed securities. A quick search online will allow you to obtain all necessary information for you to make the right decision, so please do so!

Real estate limited Partnership (LP)

Likewise, real estate limited partnerships operate with a hands-off approach, mainly for limited partners, as the general manager assumes daily operational responsibilities. This may sound similar to REITs, however, real estate limited partnerships provides more direct involvement and control over property management decisions compared to REITs, which resemble stocks and offer limited influence over property management. So, if you wanted, you could be involved in creating investment strategies and work alongside the general manager.

We hope this guide provided you with some ideas on where to get started depending on your financial abilities. Investing in real estate can be a highly rewarding venture, but, as with all investments, it's essential to acknowledge the associated risks. Thus, we encourage you to seek out professional expertise to ensure you take the right actions for you!