Have you ever wanted to own a commercial building? Whether you're interested in a high-rise, a strip mall, or a nursing home, you probably assume it's going to cost you a fortune to buy your dream investment.
The reality, however, is it is completely possible to become a commercial real estate investor even if you have less than $100 available. Here are a few ways to do it.
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Invest in a REIT
One of the best and easiest ways to invest in commercial real estate is to buy a REIT.
REIT stands for real estate investment trust. REITs are companies that own, operate, or finance various types of real estate. Some are dedicated specifically to buying commercial buildings of various types, including warehouses, offices, apartments, cell towers, hotels, retail centers, and medical facilities. These REITs typically make money on rents collected, generating funds that can be paid out to investors.
REITs can be traded on major stock exchanges, although there are some public non-listed REITs as well as some private REITs. For most investors with $100 or less, buying publicly-traded REITs is the way to go. Once you've purchased one, you'll indirectly own a very small stake in all of the different buildings the company owns. You will be able to make money from commercial real estate investments without ever having to go through the trouble of becoming a landlord or paying out a fortune to buy a building of your own.
Some REITs specialize in particular types of commercial property, while others invest more broadly in different kinds of real estate. This gives you the chance to choose exactly what type of real estate investing you want to do. For example, if you think demand is likely to be especially strong for specific property types, such as senior housing, you can find a REIT that focuses on that area.
Invest in an exchange-traded fund (ETF)
You also have the option to buy an exchange-traded fund with less than $100 that will give you exposure to commercial real estate.
ETFs are traded like stocks, but they typically pool investor funds to buy assets that track financial indexes or that provide exposure to specific industries. There are some, such as the Vanguard Real Estate ETF, that invest in many different REITs -- more than 100 in this case.
An ETF has the advantage of being even easier to invest in than a REIT because you don't have to pick a specific investment trust to buy into. By spreading your money around, you reduce your risk and won't need to do as much research into each individual asset. But unlike REITs, which must pay shareholders dividends equaling at least 90% of taxable income, ETFs may pay out lower dividends. And their performance doesn't depend on particular properties but rather on how all of their collective investments in other assets do.
The right choice for you depends on how much effort you want to put into picking investments, how knowledgeable you are about the industry, and how much risk you want to take on. But the good news is, even if you have less than $100 to put on the line, investing in commercial real estate is absolutely within reach.
