Jun 22, 2023Investments

Top 5 Ways to Invest in Real Estate without Buying Property

by Godrej Properties Limited

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Investing in real estate requires a huge amount of money. This is the reason why investors drop the idea of buying property at times. But in this new age, it’s not necessary to have ample money for the same. In this article, we will try to understand how to invest in real estate with no money

How to Invest in Real Estate in India?

When planning to invest in real estate in India, remember that you can accomplish it with or without purchasing physical properties. Here are the steps to get started:
 

Determine Your Investment Horizon

Decide whether you seek short-term or long-term returns. Real estate investments typically require time to generate profits, so setting realistic expectations is crucial.
 

Consult a Financial Advisor

Seek guidance from a financial advisor who can assess and help you develop your financial portfolio.
 

Choose Your Investment Approach

Decide between buying physical property for investment or exploring alternative avenues such as REITs, fractional ownership, or real estate mutual bonds.
 

Determine Investment Tenure

Fix the investment period, whether a lump-sum payment or periodic investments. Payment frequency can be monthly, annually, or according to your comfort.
 

Track Your Investments

Keep a record of your investments and monitor the returns over time. Compare the returns against the time taken to achieve them to assess the investment's profitability.
 

Can You Invest in Real Estate Without a Lot of Money?

People think that buying property is the only option to invest in real estate. But that’s not true in the 21st century. Let’s understand how to invest in real estate in India with less amount of money.
 

Where Can You Invest Without Buying a Property?

Investors seeking real estate exposure without purchasing physical property can turn to Real Estate Investment Trusts (REITs). REITs are specialised companies that invest in commercial real estate through debt and equity. Introduced in 1960, REITs in India offer an opportunity for investors to diversify into real estate as an asset class. They typically provide 7-8% annual returns to small and mid-level investors. 
 

Like mutual funds, REIT investors hold shares and receive returns in dividends based on the REIT's performance.
 

Real Estate Investment Trusts (REITs):

Real Estate Investment Trusts (REITs) has revolutionized real estate investment in India. REITs are specialized companies that make investments in commercial real estate projects. It came into existence in 1960. 
 

1.Real Estate Mutual Funds:

If you are thinking about how to invest in real estate with little money, then Real Estate mutual funds are the answer. These are quite similar to conventional mutual funds with a majority of investment in real estate stocks, REITs, as well as direct purchase of residential, commercial, and industrial units.
 

2.Real Estate Wholesaling:

Here the investor as a wholesaler gets into an agreement to buy the property that is undervalued. This property is then sold at a higher price, thereby earning profit. The wholesaler here earns from the fees that are added to the transaction.
 

3.Seller Financing:

If you are thinking about how to invest in real estate with no money then opt for seller financing. If the buyer is unable to avail of a loan, the seller can provide it to the buyer which is called seller financing. This is a unique way to invest in real estate.

4.Real Estate ETFs (Exchange Traded Funds):

Similar to stocks, ETFs are listed and traded on a stock exchange. Real estate ETFs are ETFs of companies in real estate industries like home construction, hotels, restaurants, commercial properties, etc. 
 

Crowdfunding:

Under crowdfunding, you appeal for funds from your friends, family members, investors, etc. for a   specific cause. However, as an investor here, you raise the capital for a project with other investors or real estate companies. 
 

How to Invest in REIT in India?

To invest in REITs in India, follow these steps:
 

Research REITs

Explore different REITs available in the Indian market. Consider factors like the type of properties they invest in, their track record, and dividend yields.
 

Open a Demat Account

You will need a Demat account with a registered broker to buy and trade REIT units.
 

Invest in REIT Units

Once you've chosen a suitable REIT, you can invest by purchasing its units through your Demat account.
 

Monitor Your Investment

Keep an eye on the performance of your REIT investment and track dividend payouts.
 

The final word

You have many options if you don’t have enough money and still wish to invest in real estate. But you need to understand the nitty-gritty before investing. Check and analyse the tax aspect based on your financial goals and risk appetite.


Frequently asked questions

1. Which is the easiest form of real estate investing? 

Ans: REITs are considered to be the most convenient way of investing in real estate. You don’t require a huge investment for the same.
 

2. How to start real estate investing with no money? 

Ans: To start real estate investing with no money, you can opt for seller financing, microloans, real estate mutual funds, etc.

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