This post was written by Janice Black, investment writer and community manager at Money Minx, and displays 5 ways to invest in real estate with less than $500.
Just a few years ago, real estate was a lucrative game that only the rich could play. Investors needed a lot of capital, a wide network and industry connections in order to be successful. Today, it’s a whole new game. Investing in real estate can be as easy as downloading an app or visiting a website. You simply fill out a form, make a deposit and voila – you are a real estate investor.
At Money Minx, a net worth and investment tracker, I am constantly looking for ways to help every day individuals to diversify their portfolio. What better way to start than with real estate? You may still be thinking that you can’t afford to diversify your portfolio into this asset class but what if I told you could get started as a real estate investor for as little as $500?
Here is a list of 5 ways you can invest in real estate with less than $500.
5 Ways to Invest in Real Estate
Fundrise is a crowdfunding site for real estate investments. You can open an account for as little as $500. From the start you are diversified into a mixture of real estate projects across the United States. What we really enjoy about our experience with Fundrise is the ability to view progress pictures and reports from all of the properties we’re invested in.
The app is sleek and easy to use. You can choose between collecting dividends every quarter or having Fundrise re-invest the money so you keep your portfolio of real estate growing with them. Fundrise is arguably the easiest way to get started in real estate investing.
Concreit is a newer entrant into the crowdfunding real estate investing space and it looks very promising. They allow you to invest as little at $1 to get started! They are currently in public beta, so there is a wait list to get in but based on what we’ve heard you should be able to get in quickly after you sign up. They also seem to be more forgiving than their competitors when it comes to trying to cash your money out early.
You have to remember that real estate investing is a long term game, so usually these platforms will require you to be invested for at least 3-5 years before withdrawing your money.
Rich Uncles focuses on income producing commercial properties. You can expect to receive a monthly payment from Rich Uncles from the revenue generated from the properties they invest in. You can get started with Rich Uncles with a minimum investment of $500.
Groudfloor focuses on investing in real estate debt (as opposed to equity). By focusing on debt, they can better predict their returns and limit their risk of potential losses. Their investment cycles are shorter than others. They are consistently producing 10%+ returns and currently have an account minimum of only $10.
San Diego-based Diversy Fund is a crowdfunded eREIT platform with an account minimum of $500. Their investments are usually focused on large multifamily buildings. They take a value-add approach to investing which allows them to generate returns in two ways:
- dividends from cash flow and
- dividends from the sale of the asset after an average of a 4 year hold period
Dividends are automatically reinvested until after the holding period – so be sure you are ready for a long term investment.
Bonus: If you are outside of the United States or want to invest outside of the US, take a look at Estate Guru (.co not .com). Estate Guru lets you invest in real estate loans across several countries in Europe. From this one platform you can have a real estate investment in Spain, Portugal, Latvia, Germany, and more. Their account minimum is only €50.
Potential Sources of Risk
Any investment you make will usually come with a certain level of risk. When assessing if an investment is right for you, it is critical that you consider the inherit risks in addition to the rewards. When it comes to crowdfunding these are the key risks you should consider:
Pay attention to the redemption rules and fees of each platform and plan accordingly. Real Estate is a long term game. If you are planning on using the funds in 2-3 years you should reconsidering jumping into any of these platforms as they all recommend an average hold time of at least 5 years.
Each platform is priced differently and has a different set of fees. As you sign up for a crowd funding account they will present you with an investment summary. Always read the fine print and make sure you understand the fees.
By diversifying your holdings, you can reduce the potential of a capital loss but note that there is always a risk of market crashes.
Janice Black is an avid investments writer and community manager at Money Minx, where she helps investors engage with other investors to talk about investment strategies and money making opportunities. When she’s not working, you can find her traveling using her VR headset because COVID made that fun.
Disclaimer: The content of referred websites only belong to Money Minx and investment providers, respectively. Manage-your-Money.com is not responsible for any links or content within those websites.
*Invest at your own risk. This article does not constitute investment advice and is for educational and entertainment purposes only.*