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9 Real Estate Investment for Small Investors

The Government is bringing about reforms in the Real Estate Sector and helping small investors to make a good real estate investment. Previously, we could not imagine investing as low as Rs.2 Lakhs in the property market. However, now it will be made possible because (Securities and Exchange Board of India) SEBI has given its approval to Real Estate Investment Trusts (REITs). This will work more or less like and equity fund wherein REITs will pool in money from investors and give units in exchange.

The money collected from the investors will be invested in commercial properties that are completed and that which generates income. An REIT has to first get registered and then they will have to raise funds through an initial offer or IPO. It is mandatory for the REIT units to be listed on exchanges and will be traded like securities. The minimum issue size of the initial public offer should be Rs.250 crore or more. Therefore, investors will be able to buy units of REITs from primary or secondary markets.

Some of the advantages of investing in REITs are low entry level, safe and diversified investment option at very less risk which will be professionally managed to make sure that the return is high on investment. This arrangement is basically characterized by good investment in real estate assets with limited liability for unit holders. An investor can receive two kinds of returns from REITs, that is, through dividend income and the other is through capital gains when he sells the units of REITs in exchanges. REITs are for people who want minimum risk and who would like to get a regular income. It is also for people who want to invest not only in gold and equity but in other investments that are safe and pay well.

Nowadays investing in residential property, keeping it for a while until the value appreciates and then selling it is another way of making money. You can either pay cash down for the house or otherwise there are many ways you can do it with little or no money in your hands:

  • Borrow money to purchase a residential plot or house.
  • The seller may help you by financing for it and you can repay it in regular installments.
  • Lease the property with the intention of buying it later.
  • Pay in kind by doing some other service for the seller, which will help in repaying the amount.
  • Take over the mortgage payments in exchange for the deed.
  • Get into a partnership with someone who will do the funding and you can help in managing the whole deal.

When you consider becoming a real estate investor you will have to be patient. It will take some time and you will become experienced only when you make mistakes and learn from them. It is not necessary that you have to be an expert to invest in real estate. Not everyone is well versed with the tricks of the trade. However, you do need to do a thorough examination of what you are going to do. Learn all that you have to learn about the kind of investment you are interested in. You must develop the habit of reading a lot of real estate material, which will give you a lot of information. In addition, try to get acquainted with some small investors, get friendly and get to know their ups and downs. This will give you a lot of insight into the real estate world. Learn the ways in which they go about their investments, how they deal with people, etc. You should have innovative ideas when you think of investing and sacrifice your little pleasures like a holiday, and use that money to make your down payments. Learn to calculate the profit you may be making in your deals. Plan your progress and it is always better to start small and move upwards. You have got to treat this like a regular business, so that you will be able to do your accounting and book keeping, etc in perfect order. Finally do not quit your regular job because of this. You can always do this as a side income.

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