How to invest in property with just a few thousand dollars
Buying property is a big cost outlay but there are ways to buy a slice of a home without forking out a fortune.
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Signing the dotted line on a property contract is one of the biggest financial decisions anyone can make, and usually comes after years of solid saving.
Strong expectations of house price rises in 2020 will likely lure more people to invest in bricks and mortar.
Fractional property investment is a growing option, enabling investors to snare a small slice of a property instead of the entire four walls.
Companies offering this include ResiFund, BrickX and DomaCom.
Investors receive income from the rent charged at the property or any capital returns that are accumulated when the property is sold or they sell their investment portion.
Crew manager Jesse Cole, 31, and his wife Chelsea, 30, are fractional property investors and have used it to help build wealth.
“I’ve been dabbling in shares and other sorts of assets but it’s the first property fund I’ve invested in,” Mr Cole said.
“It’s another way to invest money – I just don’t think you can go wrong with property.”
Mr Cole owns his four-bedroom home in Brookfield on Melbourne’s outskirts and also purchased an investment property in December.
He said the initial investment he made in ResiFund was $5000 and any returns he received he reinvested the money.
“I tip $200 a month into it and when I get a bonus I invest that,” he said.
“Obviously you don’t want to put all your eggs in one basket so I want to spread them around.”
ResiFund chief executive officer Matthew Lewison said it had been investing in residential property for more than 30 years.
He said fractional investing was a great way to crack into the market for those “who haven’t been able to save a big deposit or don’t want to take on debt themselves”.
But investors should carefully check the fees associated with this type of investment and understand how returns work.
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Tribeca Financial’s chief executive officer Ryan Watson said fractional investing enabled people to grow their money “with minimal capital”.
“It allows investors to hand pick the underlying property that they would like to invest in, as opposed to say a property trust which invests in largely unknown properties,” he said.
Mr Watson encouraged investors to consider how much risk they were willing to take on, their investment time frame, ability to sell and liquefy their investment and what returns they could make.