For people with small savings, the idea of investing in real estate as a way of earning money, at first, may seem absurd. Such investments look like huge expenses, huge risks, huge efforts to participate in economic realities that are often incomprehensible. And all this with zero guarantees that the efforts and resources spent will pay off.
However, is it the same? How difficult are such investments and can they be a real source of income for ordinary citizens, not just wealthy investors? In recent years, we have seen how various ways of earning money on real estate for ordinary citizens are multiplying.
In particular, there are even such areas as crowdfunding real estate investments. Almost a cooperative of individuals who invest small pieces of their wealth in a common pot of funds for real estate investments that will enrich each participant.
The multiplying tools for such earnings primarily indicate the presence of demand among the population for such tools. This indicates at least that someone can and wants to turn real estate investments into a decent means of income, even without having significant savings.
For example, in Spain, according to a study by Aedas Homes, up to 15.2% of Spaniards last year actively considered buying a new home as an investment for earnings. After all, real estate is a good haven for savings during periods of inflation — a pressing problem in current realities.
Even the usual rental of real estate can bring benefits. For example, the return on investment in residential real estate in 2022 increased to 7.2% on average in the country. The profitability from renting out offices increased to 11.3%. Investments in other commercial facilities, for example for retail, showed an increase in profitability to 9.5%.
Indeed, most of the dangers of such earnings come from a lack of awareness of the amount of resources and efforts that need to be made in order for investments to bear fruit. Making money on the provision of real estate for rent is not as difficult as it may seem, but at the same time it requires a little more than just buying some object and writing an ad "for rent".
For success, you always need a reliable investment strategy that takes into account not only how much money you have and can get for investment, but how much time and personal effort you can devote to this activity. For example, do you have the necessary knowledge, understanding and motivation to do business on your own, or should you think about hiring a specialist? Do you have enough of your savings to invest, or should you take out a loan and, if you take out a loan, you should ask yourself what share of your income payments on it will be taken away.
There are a lot of questions that need to be answered and the task is not easy, but there is nothing that cannot be solved with a pen, a piece of paper and several evenings of thoughtful reflection.
Probably the main advice that can be given, apart from the fact that it is better to enlist the support of professionals, is to choose which type of property suits you the most. The real estate market is diverse, even within specific niches, the offer can be very diverse. For people with minimal savings, it is better to start with real estate. But which one? Depends on the situation.
For example, in Spain, more and more people find themselves without the opportunity to buy new, large housing. Small apartments and coliving are becoming much more popular. The demand for student housing is increasing, which is why in the last couple of years this segment of the market has begun to attract an increasing number of investments even from large international companies.
In the commercial segment, office space is again beginning to play an increasingly important role. Real estate for companies in the retail sector offers one of the most stable rates of return on investment. We can also mention warehouses, which still remain strong assets, sometimes yielding double-digit returns. Although commercial real estate, of course, requires a lot of resources from the investor.