Starting to invest in real estate monthly or periodically? In this article you will learn all about monthly investing in real estate. We begin by explaining how monthly investing in real estate is possible. There are several ways. Then we will look at scenarios on how much periodic investing in real estate gives us. Based on that, you can calculate your capital growth. And finally, we cover other ways for periodic investing, from stocks and commodities to crypto-currencies.
Let's begin.
How monthly investing in real estate?
Many people think of real estate investing as a difficult thing. Buying real estate requires a large initial capital. However, this is not always true. There are even ways to buy real estate without your own money. Something we just don't recommend, because of the higher risk profile.
Monthly investing in real estate is quite easy. Even for beginners. How? Through these investment options:
- Real estate funds
- Crowdfunding in real estate
- Real Estate Investment Trust (ETF)
- Real estate stocks (ETF)
The above opportunities are in order from relatively easy to relatively difficult. You can also interpret this as relatively lower risk to relatively higher risk. Below we explain the four options.
How to invest in real estate funds monthly?
You are wondering how to invest in real estate periodically. The easiest way is to choose one or more real estate funds. The great thing about real estate fund investing is that it is one of the few pure forms of passive income.
Here's how it works: you create an account. Each month you deposit an amount of money you can spare. In some cases, you can even make automatic monthly investments in real estate. Then you are patient and have dividends reinvested or paid out.
Want attractive returns with monthly real estate investing with 100% passive income?
Then view and compare the best real estate funds.
How to invest monthly in real estate crowdfunding
How can you easily invest monthly in real estate? The second way is through crowdfunding. There are several crowdfunding platforms. On them, you will find various real estate properties offered as investments. This offers the opportunity to invest small amounts monthly in various real estate projects. The return varies between 3 to 8%.
In our view, this is less attractive than real estate funds, as they offer higher returns.
On the other hand, crowdfunding allows you to select your own desired real estate properties. This makes the investment more tangible, and many people like this.
How to invest in Real Estate Investment Trust monthly?
A Real Estate Investment Trust (REIT) is a publicly traded real estate fund. The main difference is the stock market listing. This results in some important differences, including more liquidity (quick entry and exit) and much more price volatility.
Because a REIT is publicly traded, your investment will not be stable. Novice investors can make costly mistakes here, such as buying REITs at too high a price point.
However, there are also opportunities here for the advanced investor. Namely, it can buy undervalued REITs, possibly with a high periodic dividend payment. Undervalued stocks can offer price returns, provided long-term growth is adequate.
You note: periodic investing in REITs is more complex. Therefore, the risk profile is also higher.
Now, how to periodically invest in a Real Estate Investment Trust?
To be honest, you first need to gain the necessary knowledge for this. Once you have this, you will understand the following steps:
1. Create an investment account with a broker of your choice, such as on the best investment platforms
2. Deposit money over what you can spare
3. Analyze all available REITs
4. Filter the best REITs based on dividend, strategy, management, financial valuation, growth, profitability, momentum and short-term earnings forecast
5. Invest your assets in several best REITs based on a distribution key
6. Hold winners for a long time
7. Sell the losers in time
8. Cream off profits in strong stock market years with higher financial valuation (overvalued)
9. Reinvest skimmed profits and paid dividends at low financial valuation (undervalued)
We can summarize this as: buy low, sell high and repeat.
Tip for beginners: you can also buy a REIT ETF. An ETF is an equity fund that invests money in multiple REITs at the same time. Beginners can thus spread risk quickly and easily.
Buying real estate stocks periodically
In many ways, investing in real estate stocks on a monthly basis is similar to buying REITs. Briefly, we can say that real estate stocks generally pay lower dividends and exhibit more price volatility. This means more price return, or loss, can be realized.
The "how" is similar to the above steps. In terms of expectation, you can assume that the dividend will be lower, but the potential price return may be higher.
It is important to diversify into strong companies in addition to real estate. You can buy dividend stocks as well as Value stocks with low financial valuation and/or strong growth projections.
Want to achieve high returns with stocks? Our advice: learn from the best. Don't try to invent the wheel yourself. Unnecessary. And often very painful. 8 out of 10 investors lose money.
We have excellent experience with Weekly Insider from Capitalist Exploits, who are proven to achieve 15 - 20% returns on stocks. Learn from experts and build wealth, it's that simple.
How much monthly investment in real estate?
The beauty of the examples above is that they are all suitable for investing with little money (in real estate). You don't need to invest a lot. Investing with small amounts is perfectly possible, even in real estate.
The question may be: how much monthly investment in real estate?
The universal answer is: invest only with money you can spare.
Once you have calculated how much you can spare, you can then ask yourself how much monthly investing in real estate can yield. This answer depends on three aspects, namely (1) the monthly deposit, (2) the term and (3) the return. Here we make the assumption that you will be reinvested dividends in the interim.
Let's look at some scenarios for how much periodic investing in real estate can earn us.
Scenario 1: investing 200 euros every month
Suppose we have an initial capital of 2,500 euros. We invest 200 euros monthly within a diversified real estate portfolio. We assume an average net return of 8% per year. In order not to count ourselves rich, we apply 2% inflation which shrinks our capital every year.
The result is interesting even at this small amount:
- After 10 years: ±€33,000
- After 20 years: ±€92,000
- After 30 years: ±€195,000
- After 40 years: ±€350,000
So investing a small amount in real estate every month can make you quite rich.
Scenario 2: investing 500 euros a month
At 500 euros monthly investment, wealth increases rapidly:
- After 10 years: ±€76,000
- After 20 years: ±€218,000
- After 30 years: ±€468,000
- After 40 years: ±€837,000
Basically, this means that any student who starts monthly investing in real estate now can become very rich at retirement age. This means that anyone can build a large wealth with a small monthly amount. Simply by investing at market average returns.
Scenario 3: invest 1500 euros a month
For those who want to stop working earlier, there is the choice to increase the monthly deposit. This is the result at 1500 euros per month:
- After 10 years: ±€200,000
- After 20 years: ±€600,000
- After 30 years: ±€1,400,000
- After 40 years: >€3,000,000
After barely 26 years, we would be millionaires. Well, almost then. We will still have to pay taxes so the actual result will be slightly lower. All in all, the situation shows that anyone can build serious wealth with monthly real estate investing.
Are you more advanced? Then you could well realize 10% or higher. The result at 1500 monthly deposits is not €1.4 million after 30 years, but an attractive €1.9 million (excluding taxes). In other words, 2% extra return can add hundreds of thousands of euros.
What are the benefits of periodic investing?
As we can see, there are interesting advantages to periodic investing. The biggest advantage is that anyone can start with a small monthly amount. Investing small amounts can lead to a lot of wealth in the long run. For this reason alone, you would want to start right away with money you can spare.
And what are the disadvantages?
Of course, there are also disadvantages to monthly real estate investing. First of all, investing has risks of losing money. You can lose (part of) your investment.
Another disadvantage is that you need patience and discipline. It takes 10 or even 20 years to realize a nice amount of money. But in the 5 years after that, assets can double. And in the years after that, it goes even faster. This is the power of yield-on-return, also called compound interest.
Finally, there are some practical disadvantages. For example, when buying (real estate) shares on a monthly basis. In this case we incur relatively more transaction costs because each buy order has a minimum cost. It is also difficult to achieve a good spread of risk in the beginning, simply because we invest a small amount each month.
However you look at it, investing monthly can be a golden move in the long run. Keep in mind that you can lose money. Consciously choose lower risk if you are not very familiar with the market.
Monthly investing options
Besides real estate, there are several other ways to invest monthly. Below we offer a brief introduction to various possibilities.
Periodic investing in stocks
Monthly investing in stocks has interesting advantages. You can get started quickly and easily. Transaction costs are fairly inexpensive with the right investment platform. With relatively small amounts, diversification is quickly achieved. And liquidity is high because you can buy and sell shares quickly.
Unfortunately, investing in stocks also has some practical drawbacks. First of all, you need expertise. See the tips from above under the section "Real Estate Investment Trust" and "real estate stocks. In addition, price volatility is not for everyone. And in some cases, with a small amount of money we cannot buy the shares we want (because the price is high). Although brokers nowadays offer the solution to this in the form of 'fractional shares'.
The biggest advantage to investing in stocks periodically is the return. Advanced investors can achieve above-average returns of 15% or higher.
Periodic investing in ETFs
Instead of stocks, you can easily diversify as a beginner through stock funds. These are ETFs, which stands for Exchange Traded Fund. There are many different types of ETFs. How and what we are not going to explain in this article. Just know that it is an interesting investment product where you can opt for monthly investing just fine.
Periodic investing in crypto
Young people in particular choose to invest in crypto currencies. In principle, monthly investing in crypto could work out well. It is still a relatively fledgling investment market. Price volatility is enormous. Bitcoin, Ethereum, and other crypto coins can easily fall 50% in a year. Or rise 300%.
By investing in crypto coins monthly, you can realize an average purchase price in the long run. After, say, five or 10 years, this could be profitable if the crypto market as a whole continues to rise.
However, it remains to be seen whether this will happen. Unlike stocks and real estate, it is a very risky investment.
Other alternatives
There are still plenty of alternatives. Consider commodities, P2P lending, and corporate loans to name just a few examples.
Conclusion on monthly real estate investing
In this article, we have seen that monthly investing in real estate is perfectly possible. Investing even small amounts can make us prosperous in the long run. Any beginner can pursue a market average return, and become rich simply thanks to the power of patience.
At least, if average returns can be achieved in the long run. And that, of course, is not completely certain. Investing now has risks to money loss. Therefore, be wise. Invest with money you can afford to lose. Don't do crazy things. Diversify. And above all, be patient.
In the long run, monthly real estate investing can enrich your life financially. In addition, there are several ways for making money with real estate.
Questions or comments? Ask them below in the comments.
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