5 Ways to Invest in Real Estate With Just $1000

1. Real Estate Investment Trusts (REITs)

How can beginners invest in real estate with little money? By investing in REITs, which works a lot like investing in mutual funds or stocks. A REIT is basically a company that pools together money from different investors and uses it to buy various investment properties. This could be office buildings, multi-personal homes warehouses, hotels, industrial property, or retail space. As a shareholder, you will be paid a dividend when the properties generate a return on investment. Investing in REITs is hands-off, safe, and offers potentially high returns.

When assessing REITs, look for a company that has been in existence for a while and that has a great management team. In addition, the company should also have a good track record of offering high dividend yields.

2. Fractional investing

Fractional investing involves pooling together many people’s money to buy one investment property. You then have a small stake in that property, according to what percentage of the overall value you invested in.

A recent example of this system is Sydney fintech BrickX, which has 19 houses and apartments in Sydney, Melbourne, Ballarat, Adelaide and Perth.

BrickX divides each investment property into many units called “Bricks”, which can then be bought and sold by individual investors. The company runs a marketplace where people can put up their Bricks for sale and those interested in buying can bid for them.

3. Tax Liens

For real estate, there is one certainty – property taxes. Some states don’t have income tax, some states don’t have sales tax, but I don’t know a single state without property taxes.

And when people don’t pay their property tax bill, the state or county government puts a tax lien on the property. Then, as governments tend to do, auctions off that lien because it needs the tax revenue. The person who buys the lien is guaranteed an interest rate, based on local and state laws, on that investment.

If the property owner does not pay up within the allotted time, the owner of the tax lien can foreclose on the property and is in line ahead of everyone, including mortgages. In many cases, the banks will pay off the lien because they don’t want to lose the house.

4.Hard Money Loans

A hard money loan is a loan that you make to a real estate investor with a piece of property as collateral. It’s structured as a note, meaning the investor is in fact a borrower and you are not “invested” in the property per se. You and the borrower agree to the terms of the loan (interest rate, length of note, payments, etc.).

I’ve only ever done this once, with someone I knew and trusted, and so far it’s worked out well. Interest rates are typically in the 11-12% (higher if riskier, lower is safer) but I’m not the best person to ask when it comes to vetting offers and finding them. I want to include this option since it is available.

Remember, you aren’t investing in property, you’re lending money to an investor who will pay you a fixed rate of return. It is, however, some exposure to real estate.

5.Real Estate Partnerships

A partnership is another great strategy to consider when thinking of how to invest 1000 dollars in real estate. Combining forces with other like-minded people allows you to achieve what you wouldn’t have been able to working alone. A real estate partnership falls into 2 main categories:

• Active partnership – This is where all partners are actively involved in the daily operations of the business. For instance, one partner could be in charge of property management, while another handles marketing.
• Passive partnership – In this arrangement, one partner provides the capital while the other does all the work.

You can form a real estate partnership with family, friends, members of an investment club, or angel investors. Be sure to do your due diligence on the credibility, experience, and track record of potential partners before getting into an agreement. It would also be wise to involve a neutral party such as a financial advisor or attorney who can provide guidance in case of a dispute.