Financial experts have said that real estate is the way to true wealth for years. Real estate appreciates, often at a rate higher than other investments. The trick for many would-be investors is the cost of entry, which can be quite significant if you’re buying a property. It can also be difficult to get lenders to approve a loan for an investment property. A new trend in real estate investing removes many of these barriers for young professionals just starting out in their careers and parents of young children who have limited money to invest.
Barriers to real estate investing
A big barrier for people just starting their career or raising a family to invest in real estate is the lack of money. Many already have mortgages or are paying rent on where they live. They don’t have the income to support a second mortgage for an investment property. Even if they plan to be landlords and have a tenant pay the mortgage through rent, they must be able to cover the payments if they’re without a tenant at any point.
Getting financing is often difficult as well. Lenders hesitate to approve a loan when the person is already responsible for a mortgage unless they can show enough disposable income to cover it.
Time is often another barrier. People who are busy with their careers or taking kids to soccer practice don’t have the time to maintain and manage a property. The day-to-day operations of an investment property can be quite time-consuming.
A third barrier to real estate investment is the lack of knowledge and experience. The process of finding and buying an investment property can be overwhelming. Managing your purchase is often challenging as you deal with broken water pipes, backed-up sewer systems, damaged appliances, and more. If you have a problem tenant, you may have no idea how to handle them or what legal recourse you have.
A better method of real estate investing
With all these challenges, it may seem like your dream of investing in real estate as your path to wealth management is doomed to fail. However, a recent trend allows you to begin investing in real estate with minimal investment. Fractional real estate investment provides a gateway for new investors to find properties and invest with whatever money they have available.
With fractional investments, you invest in a portion of the property and receive dividends based on your fraction of the total investment as passive income. For example, you might invest $20,000 in a $200,000 single-family home that is rented out to a tenant. Since your investment is 10% of the total, you could receive 10% of the profit after expenses have been taken out.
Many investors who take this route return their profits to the investment to increase their earnings. Since outside management companies manage these properties, you don’t have any responsibilities for the day-to-day operations. Your only involvement is in the original investment, which frees up your time for your career and family obligations.
Partnering with the right team
One of the challenges of fractional real estate investments is finding the right opportunity. You also want to know that the property you’re investing in is one that will provide a long-term return on investment for you.
Ark7 is dedicated to providing opportunities to investors who don’t have the money, time, knowledge, or interest to take the traditional route. Our properties are vetted and managed by capable, experienced outside management companies. We hold ourselves and our partners to a higher standard, allowing people to invest with as little as $100. With properties in ten states and growing, we use the latest technology and data to help investors achieve their goals and live their dreams.
You can learn more about what we do, the properties we have, and how you can get started when you sign up for free.
Final thoughts
If you want to build your wealth through real estate but face one or more of the mentioned challenges standing in your way, fractional real estate may be the answer to your problem. This method of real estate investing requires minimal time and money to get started. You can begin to see a return on your investment right away. Contact Ark7 to learn more about how you can get started.
