Ways to Start Small and Invest in Real Estate as a Tenant

Real estate has been one of the top choices for investors worldwide for centuries. There are many benefits of investing in real estate, such as a steady cash flow and tax advantages.

Thankfully, now there are plenty of ways to invest in real estate if you don’t have thousands of hundreds of dollars. Or even if you are a tenant yourself! If you’ve been interested in real estate investment for quite some time but don’t know where to start, check some strategies suitable for those who don’t own a property.

Investing in PropTech Startups

Do you like following innovations and supporting up-and-coming companies? Check out fundraising campaigns and, especially, those startups that work in the field of real estate. Right now, there is a whole upcoming industry called “proptech,” or property technology. These are companies and tools which introduce IT into real estate and create ways to assist it with everyday tasks. For example, Rentberry is considered to be a proptech startup as we incorporate technology in many different aspects of renting. These include eSign of documents, paying rent online, virtual tours, and online tenant screenings. 

Usually, the minimum investment amount starts from a few hundred dollars and depends on the fundraising platform and the company itself. In many cases, you can also receive some additional perks, such as extra shares, discounts for certain products, and more. However, you should keep in mind that investing in startups is a long-term game — for some time, you will probably see no ROI at all. But, the reward might be high too. After all, even Microsoft started in a garage!

Subletting a Room

While it’s not an investment strategy per se, it’s an excellent opportunity to make some extra money and decide whether being a landlord is the right path for you in the future. If you have an extra room left from your working-at-home era or got a larger apartment amidst the COVID-19 pandemic and now thinking about downsizing, think about finding a roommate. Or, if you travel a lot, you can rent out your place for a few days on Airbnb. 

Interestingly, even homebuyers use this strategy. Some people would purchase a duplex or even triplex instead of a single-family home. They live in one unit, renting out others to make extra money for paying out the mortgage. In certain cases, it’s even possible to get some extra income on top!

As you can see, certain ways to make money from real estate involve being creative and grabbing opportunities. And these are skills that any good investor would need as well.

Pro Tip: In this article, we cover everything you need to know about subletting, so make sure to read it before renting out a room on Rentberry! And, of course, check your local laws and get approval from your landlord in advance.

Investing in REITs 

Are you completely new to investing? To test out the waters and try different approaches to investing to see what works the best for you, you can try trading stocks on platforms such as Robinhood or SoFi. It’s an easy way to start your adventure in the world of investing and learn how the market works with basically no minimum investment amount. 

And, there is a way to invest specifically in real estate by trading REITs, as many of them are presented at a stock exchange. In short, REITs are companies that own or operate real estate and trade their stocks just like any other corporation.

Why do we recommend getting at least a few REITs in your investment portfolio? First of all, they are perfect for diversification, as they are not that strongly correlated with other assets. Also, they’ve proven to deliver long-term capital appreciation and a stable dividend income. For even safer investment, you can consider diversified REITs, which have various property types in their portfolio. 

Signing a Rent-To-Own Agreement

Our final option is definitely not considered to be a small investment. After all, this is a path to purchasing your future home and becoming a real estate owner. But, it is the way how tenants can slowly transition into homeownership even if they don’t qualify for a mortgage yet or want to work on their credit score. 

The idea behind the rent-to-own approach is to lease a property for a certain time with the intention of buying it at some point in the future. You and the landlord would have to establish it beforehand and sign two agreements: a regular lease agreement and a second contract that describes the specifics of the future purchase.

If you want to buy your first real estate property, need a place to live right now, and don’t have the resources to buy a place just yet, it might be a strategy worth considering. What’s more, with the rent-to-own agreement, you can lock in a purchase price, so if the prices in the area go up, you could end up paying much less. Of course, it’s a gamble, and you might pay more than the property will be worth, so try to consult a specialist before signing any papers.

Pro Tip: Learn more about all ins and outs of rent-to-own agreements here.

Summing Up

As you can see, there are many different ways to invest in real estate, even if it seems that you don’t have the necessary resources. If you decide to engage in investing seriously, remember how important it is to never stop learning and being creative with what you’ve got. And, of course, always be on the lookout for new opportunities!

About The Author