How to Start Investing in Real Estate: Beginner’s Guide 2024

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Investing in real estate doesn’t mean you have to invest $100,000’s and join the high roller club with the Bentleys and Maserati’s. 

In fact, you can start investing in real estate with as little as $10 and still make a pretty nice return on your investment. 

One of the most proven strategies to building passive income and growing your wealth (aside from investing in the stock market) is investing in real estate.

Check out this crazy statistic, below:

percentage of millionaires created by investing in real estate statistic

Image: The Millennial Money Woman | Source: The College Investor

So if you want to learn how to start investing in real estate then you’ve come to the right post. 

Let’s dive right in.

Accredited vs. Non-Accredited Investor


Before I cover how to invest in real estate, I want to make sure I cover 2 very important concepts: Accredited investors vs. non-accredited investors.

Why is it important to know the difference?

You may be limited on the number of real estate investment choices you have, if you are a non-accredited investor. 

So here’s the difference:

Accredited Investor Non-Accredited Investor

Income limits?

Yes

No

Net worth test?

Yes

No

Increased investment restrictions?

No

Yes

If you’re wondering whether you make the cut as an accredited investor, take a look at some of the requirements below:

Requirements Accredited Investor

Income limits?

Individual = $200,000

Couple = $300,000

Net worth test?

$1,000,000+ (not including your primary home)

For individuals, you must have earned $200,000 every year for the past 2 years and expect to earn $200,000 again this year.

My husband and I did a quick net worth calculation (excluding our home) and we determined that we did not [yet] fall into the millionaire category, according to the accredited investor definition.

That said, let’s start by looking at the real estate investing options for non-accredited investors.

How to Start Investing in Real Estate for Non-Accredited Investors


Below is a list of real estate investing options for non-accredited investors:

How to Invest in Real Estate For Non-Accredited Investors

Let’s get started.

Real Estate Investment Trusts (REITs)


Real estate investment trusts aka REITs (pronounced ree-ts), are a very popular way to invest in real estate without actually having to do the work. 

There are 2 main ways to invest in REITs:

  • Buy into private REITs
  • Buy into publicly-traded REITs (on the stock market)

Here’s the general definition of a REIT:

The neat thing about REITs is that you can own real estate and you don’t have to do any of the work – the REIT does it for you, you just collect the money.

The reason why many investors gravitate toward REITs is because REITs diversify your portfolio.

Instead of just investing in stocks and bonds, a REIT allows you to invest in real estate – and chances are, even during a recession, you’ll still collect income from the REIT because people will likely pay rent. 

Take a look at some of the pros and cons of REITs:

Pros Cons

Portfolio diversification

Typically high fees

Steady source of passive income

Sector-specific risks

Could outperform stocks during a recession

Long term investment focus

Easy way to invest in real estate without doing the work

It often takes time to access money

If you’re a bit more experienced when it comes to investing – and if you’re willing to take on higher risk (for a higher potential return), then you may want to check out Fundrise.

Fundrise is a private REIT that gives you a peek into private real estate deals for a minimum investment amount of $500 (which is really nothing, considering most private real estate deals start at a minimum of $5,000 to $100,000+).

A few things to keep in mind before investing with Fundrise:

Fundrise

Average return

8.76% to 12.42% (assuming you reinvest)

Average fee

1%

Account minimum

$500

Investor requirements

None

Other notes

Highly illiquid and long-term investment

As you can see, there are significant risks – but also significant rewards – that go along with Fundrise.

Recommended Reading: Fundrise Review

Now, if you want to participate in real estate crowdfunding but want a more proven model, you may want to consider investing with RealtyMogul.

RealtyMogul is a proven and well-known real estate crowdfunding platform, offering real estate investments for both accredited and non-accredited investors. 

RealtyMogul’s main focus is on lower-risk real estate investments.

Some sectors RealtyMogul invests in, include:

According to RealtyMogul, it offers lower-risk investments because of its high standards: Less than 1% of proposed deals meet RealtyMogul’s strict requirements – and that should give you some peace of mind. 

The downside?

The minimum investment for non-accredited investors is pretty high, at $5,000. 

Plus, non-accredited investors can’t participate in crowdfunding – they are only limited to investing in REITs.

A few things to keep in mind before investing (as a non-accredited investor) with RealtyMogul:

RealtyMogul [Non-Accredited Investors]

Average return

Limited data, so no concrete numbers. 2020, a difficult year, saw no losses.

Average fee

1% to 1.5%
(plus many smaller, additional fees could apply)

Account minimum

$5,000

Investor requirements
[Non-Accredited]

Private REITs (non-publicly traded)

Other notes

Illiquid and long-term investment

All I can say is do your research first before you financially commit.

Real Estate Crowdfunding


Real estate crowdfunding platforms have become very popular in the past few years as a means to diversify your portfolio and tune into some nice profits.

Here’s the general definition of real estate crowdfunding:

Essentially, crowdfunding is similar to a matchmaker platform: You’re connected with people who may be looking for you.

With real estate crowdfunding, investors (like you) “pool” their money together to fund a project in the hopes of a future payout (and profit). 

Unlike most real estate investments, where you’ll see a pretty high barrier to entry (ie – you’ll need $10,000’s or even $100,000’s to start investing), crowdfunding offers you insight into real estate investing without high minimums.

The reason why many investors gravitate toward real estate crowdfunding is because crowdfunding diversifies your portfolio.

Instead of just investing in stocks and bonds, real estate crowdfunding platforms give you the option to invest your money in opportunities you may have otherwise not been able to invest in.

Take a look at some of the pros and cons of crowdfunding:

Pros Cons

Portfolio diversification

Typically high loan default rate

High-profit potential

Illiquid investments

Potential for steady income and equity appreciation

Long term investments

If you’re a more experienced investor and if you’re willing to take on higher risk (for a higher potential return), then you may want to check out the crowdfunding platform GROUNDFLOOR.

GROUNDFLOOR is one of the few real estate crowdfunding platforms offering short-term loans to home flippers.

The best thing about GROUNDFLOOR is that it has an extremely low minimum of $10, so virtually anyone can be involved with this passive real estate investing option. 

With GROUNDFLOOR, your money will typically be used for:

  • New construction projects
  • Renovation or “flipping” projects

Typically speaking, once the property is completed, it would then be sold or rented so you’ll receive your loan plus profit. 

A few things to keep in mind before investing with GROUNDFLOOR:

GROUNDFLOOR

Average return

10.5%

Average fee

None

Account minimum

$10

Investor requirements

None

Other notes

Highly illiquid and risky

As you can see, there are significant risks – but also significant rewards – if you invest with GROUNDFLOOR.

All I can say is do your research first before you financially commit.

Rent out your Room or Home


One of the easiest ways to jump into the shallow end of real estate investing is by renting out either your home or your room.

It’s such a great way to earn a few extra dollars and cut down on your monthly costs. 

Now, if you’re thinking of renting out your room and want an easy, stress-free experience then check out RentRedi.

RentRedi is real estate software that helps you, as a self-managing landlord, complete many of the tasks that you probably don’t want to worry about. 

For example, RentRedi can help you:

  • Screen new tenants
  • Collect monthly rent
  • Manage your tenants
  • Send in-app notifications
  • List properties to Realtor.com and Doorsteps

It’s a good real estate app especially for landlords who are introverts (like me) and don’t want to deal with tenants face-to-face.

Take a look at some of the pros and cons of RentRedi:

Pros Cons

Easy to use

Unable to customize app

Low price

Tenants must download the app as well

Easy to collect monthly rent

Customer service support may not always be responsive

Easy to manage tenant requests

Unable to see which tenant made maintenance request, only which unit

If you’re a bit wary of letting people into your home, you may want to start inquiring about potential tenants in your circle of friends. 

Chances are, your friends will know what you like in a tenant and what you don’t like, and they may know someone who could fit your personality and style.

Some great places to start searching for potential tenants include:

  • Your friends
  • Your community
  • Your work colleagues

Ask around and see if they have anyone looking for an apartment to stay in. 

Just remember that once you receive those extra monthly rent payments, start investing the extra cash or start paying off debt.

Buy a Rental Property


If you’re someone who has extra cash and is serious about real estate investing, you may want to consider buying a physical property and renting it out.

Now, there are many pros and cons about buying an actual home and renting it out.

Arguably, this real estate investment option is one of the riskiest but likely also one of the most rewarding, especially if you can occupy your home with reliable, rent-paying tenants.

The worst-case scenario would be if your tenants can’t make the monthly payments, you have to go through the legal process of evicting them and then you have to go through the process of finding new tenants.

You can’t make money without tenants. 

To ensure you receive a steady stream of income with your rental property, there are several ways you can invest:

  • Manage the property yourself
  • Use a property manager (takes about 10% of your monthly rent)
  • Use platforms like Roofstock where you buy a home with tenants already inside the home
  • Invest in a multi-family complex and live in one of the buildings yourself to better manage the property

The main reason why many investors tend to gravitate toward real estate is simply because real estate diversifies their portfolio. 

I know people who swear by real estate investments and refuse to invest in stocks, because they want their money to be invested in something tangible (like property).

…But I think it’s also important to not be what is known as: Cash poor and asset rich.

"Avoid falling victim to being cash poor and asset rich."

In other words, make sure you don’t use all of your spare change to buy a rental property – you still want to leave a majority of your assets invested in the stock market.

Take a look at some of the pros and cons of investing in rental property:

Pros Cons

Property appreciation

Illiquid

Portfolio diversification

High entry costs

Potential for passive income stream

Maintenance costs

Increased opportunity for financing

Long term investment

If you’re someone who is starting to consider investing in rental real estate, I would suggest you think long and hard before you actually buy a property to rent out.

Trust me, I’ve heard some horror stories with tenants refusing to move out of homes and not paying rent, tenants damaging homes, etc.

If you have a large chunk of cash, have invested in the stock market and want to buy a rental property with tenants to earn some passive income, then check out the platform Roofstock.

Roofstock is a real estate investment platform where you can buy or sell your rental home – while tenants are in the house!

All you have to do after closing on the property is sign the paperwork and start collecting your monthly rental income.

A few things to keep in mind before investing with Roofstock:

Roofstock

Average return

11% to 12% (gross)

Average fee

$0 to set up an account

0.50% of the contract price or $500 – whichever is greater

Other costs (e.g. closing costs, property management, maintenance, etc.) apply

Account minimum

Typically 20% of the cost of the rental property (equal to the downpayment)

This translates to about a $20,000 minimum for most rental properties

Investor requirements

None

Other notes

Typically, you don’t physically see the rental home before you buy it

Roofstock follows a certification process to screen the real estate/tenant deals, but it is still recommended you do your own research

As you can see, there are significant risks – but also significant rewards – if you invest with Roofstock.

What I like about Roofstock is that you have income the second you close on the house, since tenants already occupy the home. 

What I don’t like about Roofstock is that you don’t know the quality of the home, the quality of the neighborhood, etc. 

So, you might be very lucky – or you might be very unlucky. 

That’s why this investment is a higher risk.

All I can say is do your research first before you financially commit.

How to Start Investing in Real Estate for Accredited Investors


Below is a list of real estate investment platforms for accredited investors.

As a refresher, to be classified as an accredited investor, you’ll either need to have:

  • Earn $300,000 per year as a couple
  • Earn $200,000 per year as an individual
  • A net worth of $1 million (not including your home)

Take a look at a few of the platforms below that can help you get started investing in real estate if you meet the accredited investor requirements.

How to Invest in Real Estate For Accredited Investors

Let’s dive right in.

Commercial Real Estate Investing (aka CRE Investing)


If you’re an accredited investor and want exclusive access to the cool club, then you may want to consider commercial real estate investing. 

Keep in mind that commercial real estate investing is only good for you if you are:

  • A Long-term investor
  • A real estate investor
  • An accredited investor

Commercial real estate investing platforms have become very popular in the past few years, as a means to diversify your investment portfolio and tune into some potentially savvy profits.

In 2020, post-COVID, the commercial real estate industry did take a pretty massive hit, but it is expected for the industry to recover.

Let’s take a look at the definition of commercial real estate investing below:

Commercial real estate investing is typically more stable than cryptocurrency. 

So if you’re considering whether to invest in cryptocurrencies or invest it into commercial real estate deals, you may want to consider the real estate deals due to the stability. 

The downside to most commercial real estate investing opportunities is that the barrier to entry is pretty high (ie – you’ll have to shell out between $25,000 to $35,000 just to get started).

So, it’s a pretty exclusive club.

If you do want to invest in these higher-risk real estate deals, then I’d only invest a minimal amount of your net worth and keep the rest invested in the stock market.

Below are the pros and cons of commercial real estate investing:

Pros Cons

Portfolio diversification

Typically, a larger initial investment is required

High-profit potential

Illiquid investments

Passive income opportunity

Long term investments

If you want to invest your money into commercial real estate deals, then I would suggest looking for a platform that is 100% dedicated to this type of investing.

And that’s why I would recommend looking into CrowdStreet.

CrowdStreet is a commercial real estate (CRE) investing platform that matches accredited investors with pre-screened CRE investment opportunities.

Here’s how CrowdStreet can help you:

  • Pre-screens CRE investment opportunities
  • Helps you connect directly with CRE project sponsors
  • Connects you with commercial (not residential investment opportunities)

CrowdStreet will not connect you with residential opportunities, only commercial real estate investment opportunities.

There are a few things to keep in mind before investing with CrowdStreet:

CrowdStreet

Average return

Average equity multiple of 1.6x (the amount of money an investor can make on the initial investment)

Average fee

Free to create an account

0.5% to 1% for the CrowdStreet Blended Portfolio (an investment)

Fees vary based on the deal, and you can find the fees on the real estate offering detail page

Account minimum

$25,000

Investor requirements

Accredited investors

Other notes

Highly illiquid, risky, and long term investment

As you can see, there are significant risks – but also significant rewards – if you invest with CrowdStreet.

Recommended Reading: CrowdStreet Review

Peer-to-Peer Lending


In recent years, peer-to-peer lending has become a popular investing trend for investors, especially those who can handle the higher risk and higher reward relationship.

Below is a definition of peer-to-peer lending.

Essentially, P2P investors buy debt in the hopes of having their investment repaid and making a profit. 

As a P2P investor, you’ll have the opportunity to choose the loan that you want to invest in.

For this reason, becoming a peer-to-peer investor can be a risky business.

The reason why P2P lending could be an attractive option for some investors is that it’s a savvy way to diversify your portfolio.

In fact, it is estimated that by 2025, the peer-to-peer lending industry will reach $150 billion or more.

Below are the pros and cons of peer-to-peer investing:

Pros Cons

Portfolio diversification

Typically high loan default rate

High-profit potential

Illiquid investments

Can be done online

Long term investments

Source of potential passive income

Few industry regulations, due to young industry age

Accredited investors can also take part in the action by investing through P2P platforms like PeerStreet.

PeerStreet is a peer-to-peer lending platform that acts as a matchmaker, connecting investors and borrowers. 

The real estate property loans offered through PeerStreet typically only pertain to:

  • Residential properties
  • Single family properties

PeerStreet would be an optimal platform for you, if you are:

  • A real estate investor
  • A long-term investor
  • A high-risk investor

Essentially, you would be investing in private real estate loans. 

And although the real estate loans are structured to decrease risks, you’re never entirely risk-free. 

There are a few things to keep in mind before investing with PeerStreet:

PeerStreet

Average return

6% to 12%

Average fee

0.25% to 1%

Account minimum

$1,000

Investor requirements

Accredited investors

Other notes

Illiquid investments (typically lasting for 6 months to 24 months)

As you can see, there are significant risks – but also significant rewards – if you invest with PeerStreet.

All I can say is do your research first before you financially commit.

Real Estate Crowdfunding (Accredited Investors)


Just as for non-accredited investors, accredited investors can also have a larger, potentially more rewarding (and likewise more risky) piece of the pie. 

Real estate crowdfunding platforms have become very popular in the past few years as a means to diversify your portfolio and tune into some nice profits.

As a quick reminder, below is the definition of real estate crowdfunding:

Essentially, crowdfunding is similar to a matchmaker platform: You’re connected with people who may be looking for you.

With real estate crowdfunding, investors (like you) “pool” their money together to fund a project in the hopes of a future payout (and profit). 

Unlike most real estate investments, where you’ll see a pretty high barrier to entry (ie – you’ll need $10,000’s or even $100,000’s to start investing), crowdfunding offers you insight into real estate investing without high minimums. 

The reason why many investors gravitate toward real estate crowdfunding is that crowdfunding diversifies your portfolio.

CrowdCrux

Instead of just investing in stocks and bonds, real estate crowdfunding platforms give you the option to invest your money in opportunities you may have otherwise not been able to invest in.

As a refresher, below are the pros and cons of crowdfunding:

Pros Cons

Portfolio diversification

Typically high loan default rate

High-profit potential

Illiquid investments

Potential for steady income and equity appreciation

Long term investments

Do you remember me talking about RealtyMogul earlier (for non-accredited investors, who could invest in REITs)?

Accredited investors can also have a slice of the pie and invest in crowdfunding ventures through RealtyMogul.

RealtyMogul is one of the most well-known and most reputable crowdfunding platforms.

Accredited investors can pool their money with others to invest in real estate opportunities including:

  • Hotels
  • Office buildings
  • Apartment complexes

However, there are a few things to keep in mind before investing with RealtyMogul – not to mention the high account minimums for accredited investors.

RealtyMogul [Accredited Investors]

Average return

Limited data, so no concrete numbers. 2020, a difficult year, saw no losses.

Average fee

1% to 3% or more (plus many small fees)

Account minimum

$25,000 to $35,000

Investor requirements

Accredited investor

Other notes

Highly illiquid, risky, and long term investment

As you can see, there are significant risks – but also significant rewards – if you invest with RealtyMogul.

All I can say is do your research first before you financially commit.

FAQs

Common ways to invest in real estate include:

  • Renting out a room
  • Investing in real estate investment trusts
  • Renting out a property through platforms like Roofstock
  • Handing out a loan for as little as $10 to flippers using GROUNDFLOOR
  • Investing in private commercial and residential properties through Fundrise

As you can see, you don’t need to invest $10,000’s or even $100,000’s into real estate to start earning a profit. 

You can invest in real estate for as little as $10.

You can start investing in private commercial and residential real estate with a $500 minimum through the Starter Portfolio offered by the well-known company Fundrise.

However, to increase the odds of your success when investing with Fundrise, you should have a long-term investment outlook.

You can start investing in real estate with as little as $10 through platforms such as GROUNDFLOOR, where you are effectively lending your money to borrowers, who are real estate flippers. 

There are instances where such an investment can actually pay off in dividends. 

Other times, not so much, which is why you need to do your research.

Yes, you can invest $1,000 in real estate, whether you are an accredited or non-accredited investor. 

Some investment platforms allow you to invest as little as $10 in real estate and still see profits. 

If you are looking to purchase an actual property, you’ll typically have to make at least a 20% down payment. 

However, if you’re looking to invest in real estate, you don’t necessarily need to buy a rental property to be successful. 

You can get started in real estate investing with as little as $10.

Closing Thoughts on How to Start Investing in Real Estate


As you can see, many moving parts go into figuring out whether investing in real estate is the right next step for you. 

Investing in real estate doesn’t necessarily mean you need to buy a house and start renting it out. 

There are many creative ways to invest in real estate and still make money:

How to Invest in Real Estate Platform to Use

Renting out your room or home

REITs

Rental property investment

Real estate short term residential property lending

When I first started looking into investing in real estate, I thought the only way was to put down $10,000’s and buy a new rental property.

Boy was I wrong.

There are so many cool and creative ways you can invest in real estate – again, for as little as $10.

Remember that you have risks associated with your real estate investments, so make sure you do your own research before you financially commit. 

Consider your options today, diversify your investment portfolio and your future self will thank you. 

How do you plan to invest in real estate? Let me know in the comments below!

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