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Investing in real estate can seem out of reach due to high home prices. However, fractional real estate investing offers a solution for those who want to invest without needing a large down payment. Some platforms now allow investments as low as $1,000.
How Fractional Real Estate Works
Companies like Belwood Investments are leading the charge in fractional real estate. They offer an app that lets you invest in luxury properties with minimal investment requirements.
For example, Belwood Investments sold a Malibu property with support from nearly 500 investors, raising $6.4 million and buying the property for $21 million. The property was sold six months later, netting a 20% return for investors.
Investing in Real Estate with Fractional Positions
Many real estate investors borrow money to fund their acquisitions. However, firms like Belwood Investments offer an alternative by allowing individual investors to make up the difference.
Platforms like Fundrise, Lofty, and Arrived also offer fractional real estate investing opportunities with minimum investment requirements as low as $1,000.
How Investors Make Money With Fractional Real Estate
Fractional real estate is different from stocks and REITs. While these assets are highly liquid, fractional real estate is illiquid, but investors can profit through price appreciation and monthly cash flow.
Real estate investors benefit from property value increases and receive regular cash payments based on their fractional position size. Some platforms specialize in residential or commercial properties, so it's essential to consider your financial goals and risk tolerance before investing.
Reinvesting Profits
Investors can reinvest cash flow into additional properties or use profits from property sales to build out their portfolio. Platforms like Belwood Investments make it easy to start with minimal investment requirements, allowing you to grow your real estate portfolio over time.
Fractional real estate offers a unique opportunity for investors to get exposure in the market and generate long-term profits. With platforms offering low minimum investment requirements, it's now more accessible than ever to invest in real estate without needing a large down payment.
