Investing in rental properties has evolved significantly with the advent of online platforms that allow individuals to buy shares in rental properties. This method provides a way to earn passive income and build equity without the need for large capital or direct property management. Here’s a comprehensive guide on how to buy shares in rental properties, including the best platforms and strategies.
Best Platforms for Buying Shares in Rental Properties
1. Arrived
Overview: Arrived allows investors to easily invest in rental homes and vacation rentals with minimal upfront costs. The platform is open to U.S. citizens or residents above the age of 18, and you do not need to be an accredited investor to participate.Key Features:
- Investment Range: Invest anywhere from $100 to approximately $20,000 per house 1.
- Income: Earn dividends from rental income, paid out monthly, and benefit from property appreciation at the end of the investment period 2.
- Returns: Estimated historical annual returns range from 6% to 15%, depending on leverage and property type 3.
- Target Investment Period: 5-7 years for single-family residential properties and 5-15 years for vacation rentals 4.
Benefits:
- Accessibility: Low minimum investment makes it accessible for new investors 1.
- Passive Income: Monthly dividends provide a steady income stream 2.
2. Landa
Overview: Landa offers a platform where investors can buy shares in curated rental properties across dynamic residential markets.Key Features:
- Income: Receive monthly dividend distributions directly into your account 5.
- Liquidity: Sell your property shares in the marketplace, though liquidity is not guaranteed and trading may not always be available 6.
- Support: Provides dedicated support to brokers, including seamless onboarding and comprehensive reporting tools 7.
- Analytics: Real-time tracking and detailed analytics for all investments 8.
Benefits:
- Portfolio Building: Allows investors to build a diversified real estate portfolio 9.
- Ease of Use: Automated transaction management and detailed analytics simplify the investment process 7.
3. Real Estate Crowdfunding Platforms
Overview: Real estate crowdfunding platforms allow investors to pool their money with others to invest in real estate projects and earn returns.Key Features:
- Investment Structure: Investors can browse available deals and invest directly in those that fit their criteria, owning a small piece of the overall property or project 10.
- Diverse Offerings: Access to different types of asset classes and investment structures, including equity investments 11.
- Returns: Generate returns in the form of quarterly or monthly cash distributions 12.
- Minimum Investment: Some platforms allow investments with as little as $500 13.
Benefits:
- Diversification: Low minimums enable investors to diversify across multiple properties, deals, and markets 14.
- Accessibility: Welcoming to those without access to private real estate investments or the capital for physical properties 15.
Popular Platforms:
- Fundrise: Allows non-accredited investors to invest in both residential and commercial properties 16.
- RealtyMogul: Offers access to commercial real estate investments and REITs for both non-accredited and accredited investors 17.
- CrowdStreet: Provides accredited investors with access to commercial real estate projects 18.
- YieldStreet: Offers alternative real estate-backed investments for accredited investors 19.
- EquityMultiple: Focuses on larger commercial real estate projects 20.
Strategies for Buying Shares in Rental Properties
1. Fractional Ownership
Overview: Fractional ownership involves buying a portion or percentage of a property, sharing the costs and profits with other investors.Key Features:
- Shared Costs and Profits: The cost of the property and the profits are split between multiple shareholders 21.
- Management: A management team usually handles all necessary details, including reports, marketing, and billing 22.
- Investment Growth: Offers both short-term rental income and long-term equity growth 23.
Benefits:
- Accessibility: Allows investors to climb the property ladder and make gains from tenancy immediately 24.
- Passive Income: Provides a passive source of revenue while building equity in real estate investments 25.
2. Real Estate Investment Trusts (REITs)
Overview: REITs are companies that own, operate, or finance real estate investments, allowing investors to gain exposure to real estate without owning properties directly.Key Features:
- Diverse Investments: REITs can focus on various types of real estate, including multifamily rentals, nursing homes, and commercial properties 26.
- Dividends: Tend to regularly pay out high dividends 27.
- Performance: REITs have a consistent record of providing generous returns and low volatility 28.
Benefits:
- Steady Income: Offers the benefit of steady income and generous returns due to the long track record of performance within the sector 29.
- Ease of Investment: Provides exposure to real estate without the hassle of direct property management 30.
How To Start Real Estate With No Money
Investing in real estate with little or no money is indeed feasible, and there are several strategies and approaches to consider. Here are some options to explore:
- Wholesaling: This involves finding great real estate deals and then passing them on to other investors for a fee. It requires minimal capital and can be a good entry point into real estate investing.
- Hard Money Loans: These are short-term, high-interest loans that can be used to finance real estate deals. While they require the borrower to cover closing costs and other fees, they can provide the necessary capital to get started in real estate investing.
- Microloans: Geared towards startups or newer businesses, microloans are smaller than traditional financial institution offerings and have less strict qualification requirements, making them accessible to those with limited capital or credit.
- Seller Financing: In some cases, sellers may be willing to finance the purchase of a property, allowing buyers to negotiate favorable loan terms or even buy a rental property with no money down.
- Real Estate Crowdfunding: Platforms that allow individuals to pool their resources to invest in real estate projects can provide opportunities to participate in real estate investments with minimal capital.
- Real Estate Investment Trusts (REITs): Investing in REITs allows individuals to gain exposure to real estate without owning properties directly. REITs can be purchased with small amounts of money and provide an opportunity to invest in a diversified portfolio of real estate assets.
- BRRRR Method: This strategy involves buying, rehabbing, renting, refinancing, and repeating. It allows investors to recycle their initial investment capital and build a real estate portfolio with minimal upfront funds.
These strategies and approaches provide avenues for individuals to start investing in real estate with little or no money. It’s important to conduct thorough research and consider the potential risks and rewards associated with each approach.
Conclusion
Buying shares in rental properties is a viable and increasingly popular investment strategy. Platforms like Arrived, Landa, and various real estate crowdfunding sites provide the tools and resources needed to make informed investment decisions. By understanding the different platforms and strategies, such as fractional ownership and REITs, investors can build a profitable real estate portfolio with minimal upfront costs and effort.
