Small Investments

Just because you don’t have a lot of money to invest doesn’t mean you can’t be a real estate investor. Small investments from a group of people can be combined to create a larger investment fund to work with, often times this is called an investment pool. Lets take a closer look at how this work.

We’ll assume a small investment amount is $5000 dollars. We’re also going to assume that you can find 8 people that all want to contribute to the investment pool. This is a great way to leverage your money. Now we’ve got a total of $40,000 to purchase a piece of real estate with to flip.

We can purchase a foreclosed single family property for about $30,000 dollars that will definitely need some work, so we’ll put the $10,000 dollars we have left over into it in order to renovate, repair, and upgrade both the interior and exterior. You end up with a very nice house that has under $50,000 invested into it. Now the property can be sold for around $60,000 dollars, giving a total profit after expenses of $20,000.

When we split profit 8 ways, each investor gets a return of $2,500 dollars. Now $2,500 dollars doesn’t seem like a lot of money, until you compare that to your original investment. You are getting a 50% return on your money. That is an incredible return in even the best of markets.

This is a perfect example of small investing.  People always ask how people get started in real estate investing.  These people assume that you need over $100,000 dollars before you can get involved in your first investment.  If you and a group of friends can do three to five of these smaller investments, each of you can eventually go out on your own and do them separately.  Starting out as a group also helps to lower the risk by spreading it out over the entire group.

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