When I was growing up, my father would often talk about how investing in property was the best way to create real wealth. He longed to do it but saw no opportunities for himself, leaving the idea as a thread for his children to pick up on.
He is not the only person to view investing in real estate as a far-off dream. The property requires a big outlay of capital and you will potentially not make any income from it for the foreseeable future. However, in reality, there are many easy ways to get started investing in real estate, even if you have little to no capital.
Whether you intend to start by renting out a room of a home you already own or investing in multifamily homes, there are routes into the property market for you. Here are 5 easy ways to dip your toes into the realty waters.
1. Buy REITs
Real estate investment trusts (REITs) offer the quickest route into the realty market. These are similar to mutual funds, in that they are companies that own commercial real estate. By investing in REITs, you can get into the property market without having to buy a property of your own. They often pay high dividends, especially in regions where commercial real estate comes at a premium.
REITs are a good way of benefiting from regular investment property income without taking the risk on a property of your own. However, they do not offer much hands-on experience and are unlikely to form the foundation of your property empire.
2. Buy property with multiple rental opportunities
Many people assume that in order to start making rental income, they need to buy a big house or apartment building. However, all you really need is a house with multiple bedrooms. You can live in one bedroom and rent each of the other bedrooms out. The living room, dining room, kitchen, and bathrooms all become shared spaces.
This is a popular option for students, who would otherwise be living in cramped dorm rooms. You can make enough from rental income to cover your mortgage with change. This way, you start earning from rental units where otherwise you would be spending money on your own rent.
Of course, the barrier to entry is a deposit and a credit score that allows you to secure a mortgage. If you do have a significant amount of capital available, you can invest in multifamily homes. These homes will bring you significant income that can be the basis of your future real estate empire.
3. Rent out rooms using Airbnb
You can do similar if you already own a home with multiple bedrooms that you don’t use. It might feel strange to start letting strangers into your home, but many people have gone this route and ended up enjoying it. Using a platform like Airbnb, you can make a good income by hosting short-term renters from around the world. You get the chance to meet people while earning income from rooms that would otherwise sit empty.
4. Flip properties
If you do have the capital to pay a deposit and can afford a loan that exceeds the price of a home you like, you could take the opportunity to flip a property. This means that you use your design eye to improve the home, fixing any issues, upgrading facilities, and using decor to create a gorgeous living space.
Within a couple of months, you may be able to sell the home for tens or even hundreds of thousands more. In our current property climate, even properties that have not been flipped are increasing in value. The flip side is that the property market might plateau or even crash, leaving you unable to break even on your investment.
5. Get started
People who want to invest in property often wait until the ‘right time’. Unfortunately, the right time may never come. Life is unpredictable, and your plans for five years from now may seem irrelevant in 2027. If you want to get a start in real estate, you need to take the leap. This may mean investing in inexpensive property, renting out rooms in your home, or investing in a multifamily property. By getting the process underway, you give yourself the opportunity to build on your success down the line. Real estate can build significant wealth, but you don’t need to start with massive investment properties. Start small and before long you will be able to earn high passive income.
