4 Unusual Ways to Start Investing in Real Estate — for $500 or Less
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The job title “real estate tycoon” has weaseled its way into popular conversation in the last couple of years… no need to delve into why.
It makes you wonder about buying property to rent out or sell for profit. Judging by how much we all pay for rent and how little our landlords seem to do, it looks like a pretty sweet gig, right?
(That’s a joke, my dear landlord. Please don’t change my locks.)
This kind of investment comes with one little, er, major obstacle, though: You need a lot of money to get started. Houses or land can costs thousands — or hundreds of thousands — of dollars.
Unless you get creative.
Here are four unusual ways we’ve discovered to get started in real estate investing when you only have a few hundred bucks to spare.
1. Invest in Real Estate Around the Country for Just $500
Want to try real-estate investing without playing landlord? We found a company that helps you do just that.
Oh, and you don’t have to have hundreds of thousands of dollars, either. You can get started with a minimum investment of just $500. A company called Fundrise does all the heavy lifting for you.
Through the Fundrise Starter Portfolio*, your money will be split into two portfolios that support private real estate around the United States.
This isn’t an obscure investment, though. You can see exactly which properties are included in your portfolios — like a set of townhomes in Snoqualmie, Washington, or an apartment building in Charlotte, North Carolina.
You can earn money through quarterly dividend payments and potential appreciation in the value of your shares, just like a stock. Cash flow typically comes from interest payments and property income (e.g. rent).
(But remember: Investments come with risk. While Fundrise has paid distributions every quarter since at least Q2 2016, dividend and principal payments are never guaranteed.)
You’ll pay a 0.85% annual asset management fee and a 0.15% annual investment advisory fee — but the latter is being waived through Dec. 31.
Interested? Get started with Fundrise here.
2. Buy Real Estate With Your Spare Change
Don't have $500 — or even $100 to spare?
If you don’t have that kind of time or money, you may want to look into real estate investment trusts (REITs). These are funds pooled together from thousands of investors to invest in one property, like a mutual fund.
There are several ways you can invest in REITs, but perhaps the easiest is through an app called Stash. You might have heard of it. It helps folks invest and save small amounts of change. It also helps us invest small amounts into real estate.
If you don’t already use Stash, sign up here and enter the code PENNYH to get a $5 bonus.
When you invest your first $5, you’ll get another $5 bonus to invest — on us. Now, you’ll have access to all of Stash’s tools, including its real estate investments. The app costs $1 a month.
If you already have Stash, great. Go ahead and explore the REIT feature through your existing account.
Just a friendly reminder: As with any investing, there’s risk, though investing in REITs is less risky than investing in an entire shopping mall on your own.
3. Buy Land on eBay for $100
Ebay has long been a place for people to sell their weird and outlandish goods, so we’re not surprised to see users selling land for mere pennies.
Most of these thrifty plots probably aren’t worth much — now. But if you choose wisely and hang onto it long enough, a new mall or Walmart might move into town one day and need that little vacant strip.
Set your budget and search on eBay for something like “vacant residential lot” or “vacant commercial lot” to find your next investment.
Don’t forget to factor in additional costs, like title-transfer fees and annual property taxes when you’re thinking about how much this land could be worth over time.
4. Try Virtual Real Estate Investing for Free
Have you heard of the online world, Second Life? It’s a virtual world (not a game, the company asserts) that lets you have a virtual family, own a virtual home, buy virtual goods and even get a virtual job.
It became massively popular at the turn of the century, and — even if you haven’t heard about it in a while — it’s still a thing.
The world runs on Linden Dollars, which you can earn through virtual jobs or by selling your virtual possessions and creations. Or you can buy them directly with your real money.
You can also purchase virtual real estate to sell or rent out.
Ailin Graef (known by her SL avatar Anshe Chung) became the virtual world’s first millionaire flipping real estate. She’d invest real money — which goes a lot further in the virtual world than the real one — and earn real money in return when other users bought or rented her properties.
The world is free to join, and you start with a free starter pack of clothing and useful items. If you want to earn money through a virtual business, you’ll need to build up your Linden Dollars and start investing.
It’d be tough, but if you work hard in the virtual world, you could even build your riches without spending any real money upfront!
*The publicly filed offering circulars of the issuers sponsored by Rise Companies Corp., not all of which may be currently qualified by the Securities and Exchange Commission, may be found at www.fundrise.com/oc.
Dana Sitar ([email protected]) is a writer and editor at The Penny Hoarder. Say hi and tell her a good joke on Twitter @danasitar.
This article contains general information and explains options you may have, but it is not intended to be investment advice or a personal recommendation. We can't personalize articles for our readers, so your situation may vary from the one discussed here. Please seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.