How to invest in real estate, even with little money

How to invest in real estate, even with little money

At a time when most traditional investments offer limited returns, real estate presents itself as an attractive solution for many investors. diversify their portfolio and circumvent the corrosive impact of high inflation.

If you are thinking of investing in this sector, know that no need to have tens or hundreds of thousands of euros available to apply directly in the acquisition of real estate. You can invest in this sector, even with little moneythrough solutions such as funds or crowdfunding platforms.

In this article, we have gathered the main alternatives.

Buy a property to sell

Buying a house or apartment to sell later, at a higher price, is one of the ways to invest in real estate. In this case, the business profitability is essentially related to the added valuethat is, the difference between the purchase and sale price, which will constitute the “return” for the investor.

To enhance this differential, it is important search for properties in need of rehabilitation to be put back on the market at a higher price – only by “adding value” will a future buyer give more money for it. In addition location is a key factor. Restrict the search to locations with a network of services and commerce, good access and evidence of liquidity in the purchase for own use.

When choosing the property, you should also take into account the most sought after typologies in each locationas well as existence of outdoor spaces – such as balconies, backyards and terraces – which have become even more valued by buyers since the Covid-19 pandemic. In short, inform yourself well about market trends, look for areas with potential for appreciation and properties with characteristics that meet the needs of potential buyers.

Buying and selling real estate: taxes and other charges

Before proceeding with the purchase of the property, do the math well for all the costs involvednot only in the purchase, but also in the renovation of the property and in the subsequent sale, in order to be able to assess whether the business will be effectively profitable.

As a buyer, you will be subject to the payment of IMT (Municipal Tax on Property Transfers), Stamp Duty and IMI, a tax levied every year on owners and levied on the taxable equity value of real estate. If you need to use a home loan to purchase the property, you will still have to count on other charges, including bank commissions, Stamp Duty and mandatory insuranceas in the case of life and multi-risk insurance.

To these costs you will have to add the amounts foreseen, through budgeting, for the renovation works, in addition to the charges you will have later on with the sale of the property. Here, you will have to rely on the capital gains tax, with the commission to the real estate agency (if you hire the services of a real estate agent to sell the house) and with the costs related to the early repayment of the mortgage loan (if you have resorted to bank financing for the purchase of the property).

Also read: Are you going to buy a house to sell later? Find out how to value it

Buying a property to rent

When buying a property, from an investment perspective, you can choose income generation in instead of capital gains. In this case, you buy a house or apartment to rent, thus generating a monthly income.

The search for real estate should focus on locations with high demand for renttypically in urban centers, areas well served by commerce, services and transport, with good access, and close to schools and universities, if the objective is to rent to students.

In addition to the location, it is necessary to take into account the typology and general condition of the propertyas a large investment in renovation works could make the investment much less profitable.

To assess this profitability, you must take into account all the costs associated with the purchase of the property – such as IMT (Municipal Tax on Property Transfers), Stamp Duty and IMI – as well as the charges you will have later on with the rental of the dwelling.

For each lease agreement entered into, you must pay the Stamp Duty, which corresponds to 10% of the value of an income, in addition to the income tax to receive monthly, and which varies depending on the duration of the contract:

  • Less than 2 years: 28%;
  • From 2 to 5 years: 26%;
  • From 5 to 10 years: 23%;
  • From 10 to 20 years: 14%;
  • Over 20 years: 10%.

You will also have to consider other charges such as condominium, insurance, property maintenance works and commission to the real estate agencyif you use the service of professionals to facilitate the leasing process.

Housing loan for lease

If you do not have equity and need to take out a home loan, take into account that the conditions offered by the bank will not be so advantageous as it would be in the case of the acquisition of own and permanent housing. As a second home loan, the bank must offer you a higher spread and must finance less than 90% of the property’s appraisal value.

Using bank financing, you will have to add to the costs mentioned above the charges related to housing credit to see if the rent you will receive from future tenants is enough to cover costs and still make a profit.

Read also: Buying a house to rent, with housing credit

houses in Lisbon

real estate investment funds

If you don’t have hundreds of thousands of euros to spend on buying a property, you have alternatives to invest in this sector. with much less money. In some cases, just tens of euros are enough.

One of the options is real estate investment funds, which work like common investment funds, but which invest only in real estate assets, in segments as diverse as housing, hotels, offices or shopping centers.

Think of a piggy bank where several investors put their savings. Everyone’s money, together, is then invested in real estate, with the profits to be distributed respecting the proportion of the amounts invested. This is the logic behind an investment fund, which also offers advantages through diversification: Less profitable investments are offset by others with higher returns.

In this case, the investor buys the so-called “participation units” in the fund, not having to worry about the choice of properties, with all the costs involved in the purchase, sale and lease of the dwellings, as well as the conservation or maintenance costs of the properties. portfolio properties.

All this management is in charge of the fund management company, whose objective is to make the best possible return on investment and maximize the profits obtained, acting in the exclusive interest of the participants. Here, in addition to income taxation, you only have to consider the costs of commissions on subscription, management, in addition to possible redemption commissions. For this, it is essential that you read the prospectus of the funds and understand all the conditions.

In investment funds, the profitability is not guaranteed and there is no guarantee of capitalwhich means you can lose the money you invested.

Also read: Is it worth investing in Real Estate Investment Funds?

Crowdfunding real estate

Another alternative to direct investment in the purchase of real estate is the so-called crowdfunding real estate, or crowdfunding.

As its name implies, the crowdfunding happens when a group of people get together to finance a project, an investment, or even a new business. This capital raising is done through electronic platforms accessible via the internetwhich must be registered with the Portuguese Securities Market Commission (CMVM), being supervised by this entity.

There are several types of platforms crowdfundingincluding those that are exclusively dedicated to investments in the real estate sector and that, in most cases, accept investments from 50 euros. Of course, the greater the investment, the greater the potential return.

Currently, they are registered with the CMVM two crowdfunding platforms dedicated to financing projects in the real estate sector: Querido Investi uma Casa! ( and Housers (

Both operate in the collaborative loan financingwhere the remuneration is made through the payment of interest, whose value is fixed at the time of fundraising.

Since it is a investment without guaranteed capitalinterest rates are more attractive when compared to other conventional products, where a lower level of risk is accompanied by a lower return.

Also read: Crowdfunding: an investment opportunity?

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