How To Start Investing In Real Estate With Less Money

Do you have a nose for real estate investments? Are you itching to invest, but short on cash? There are ways to enter the real estate market without taking huge loans or leveraging oneself too much. The risks, as well as rewards, for such investments will be much different than a traditional property purchase, but give you an entry into the world of real estate investments.

Here are a few ways through which you can start investing in real estate property even if you have less money:

Real estate stocks: Real estate investment trusts or REITS are a good way to invest in real estate with regular returns. However, they are not yet functional in India, and the market and the government alike is still working on its revival. The next best option is to invest in stocks of real estate companies. It can give you the advantage of good turns in the sector, which will be reflected in the stocks. This will ensure that your investment will remain liquid and short-term, and you have the opportunity to exit before or during a downturn. Go for stocks of real estate companies which have a good land bank, comparatively less leveraged (is not burdened by huge loans) and offer good dividends. If you are too peeved to do the research and invest in the stock yourself, go for a mutual fund which invests exclusively in real estate and is run by a reputed financial firm.

Group investments: Group investments have been popular with public sector employees for many decades. A large number of employees of a public sector unit (PSU) would come together to buy or build a large number of properties, mostly apartments, called group housing. The same principle has been applied by younger individuals to invest in new and emerging properties. These investments are made by a group of 10 or less members who hunt for properties which offer hope of good appreciation in the future.

However, such investments are made in the form of land and not a built or under-construction property. So, it will require a lot of research before making the investment and will also require a lot of efforts during and after the purchase of the property. Ensure that at least one of the members of the group lives in the vicinity or at least in the same city or town where the investment has been made. This will ensure that there is some sort of vigil on the property at all times.

Crowdfunding: It is an emerging trend of investment where a number of property owners and individuals come together online to invest in a property. The advantage of crowdfunding is that you can put in any amount of money that you are comfortable with into a property. This will add no strain to your Budget. However, many scams and frauds have been detected in the crowdfunding model. Hence, it has been slow to take off. The scenario of crowdfunding might change as the Securities and Exchange Board of India (SEBI), the stock market regulator, is bringing crowdfunding under its purview. SEBI has specified that only those entities which register with it will be able to seek crowdfunding across sectors. This will ensure that only serious players come in to seek funds, making it an attractive investment option.

Katya Bellamkonda is a Mumbai-based writer. She has spent the last nine years reporting on many sectors in India including energy, infrastructure, technology and telecom.