HOW DO I START INVESTING IN REAL ESTATE YET I HAVE LITTLE MONEY?

We all have dreams if not imaginations on businesses or wealth we want to own. Sometimes, our dreams fall short because the amount of capital investments we have is less than the amount that is required. Similarly, real estate investment would be your dream but you wonder how to make it through with the few coins you might be having. Real estate investments guide you to financial freedom. With little amounts, all you need is to strategize and think through a way you would identify opportunities in the industry. Here are insights on how to start off investing in real estate with little capital.

• Through lease option

This is undoubtedly one of the best options in which one can enter into real estate investment with little capital. With this option, the property owner can charge you on monthly basis or yearly basis (according to your agreement). This maybe a little higher rental payments compared to one who invested/bought property at once.

• Borrowing money from money lenders

Instead of opting for a bank loan, one can decide to ask money from individuals or a groups. In Kenya, these groups are commonly referred to as “Chamas”. Borrowing from such money lenders instead of a bank is justified in the sense that they are not corporate entities and therefore may have shorter and simplified ways of acquiring loans. Banks usually have a lot of requirements and you may end up being frustrated over the process. Banks may also deny you a chance to borrow citing the idea of more risks involved which would be opposite when it comes to private borrowers. This method also would mean that you are ready for a higher interest rates because the lenders take a greater risk.

• Partnerships

So many stories we have heard of friends coming together and working through a project to gain from it. Partnering with friends to invest in real estate would be a wise thing. Also, you can bring in an equity partner if the value of the property is outside your range. An equity partner is one you bring it to help in finance the transaction.

• Trade ins

This might be hard to practice but if the seller is willing to trade in your old property with a newer property, this is one of the best ways in which one can effectively own a new property with little amounts. By trading an old property with a new property, you will not only be able to acquire a new property but also avoid the capital gains associated with the selling of a property.

• Owning Shares of REITs

Real Estate Investment Trust is liquid in its nature and are regulated investment vehicles that enable collective investment in real estate, where investors pool their funds and invest in a trust with the intention of earning profits or income from real estate, as beneficiaries of the trust. REITs source funds to build or acquire real estate assets which they sell or rent to generate income as defined by Cytonn. The income generated by REITs is the distributed to the shareholders at the end of the year. This could be a great way of owning property with little amounts and by ploughing back the benefits of REITs shares to owning a property.

Conclusion,

Real estate investment is a lucrative business and offers one security, accumulation of wealth as well allowing great profit gains. Identifying opportunities in real estate investment and acting upon them with proper strategies can ensure one prospers regardless of the initial amount of capital. The industry itself is capital intensive but with little amounts, it is still considered as a huge step. If you are new to real estate industry, you can learn more information on real estate investment. You can also follow us for more information on the same.