Thinking beyond traditional bricks and mortar investment strategies opens a world of opportunity, much of it available with as little $25,000 or less.
Property trusts — also known as real estate investment trusts or REITs — can be bought and sold on the sharemarket and allow investors to own slices of Westfield shopping centres, apartment blocks, office towers, Bunnings warehouses, factories and more.
REIT unit prices can move around like shares, and they have lost about 15 per cent in value since August after surging 50 per cent in the three years prior.
Real estate author and university lecturer Peter Koulizos sees them as “a very good option” for those without hundreds of thousands of dollars to spend and who are happy to give up control.
“As a trust they have to distribute all their income, and there will be some capital growth,” he says.
There also can be capital losses, as many REIT investors discovered during the Global Financial Crisis when the then debt-fuelled sector slumped almost 80 per cent and has not yet recovered. So don’t put all your eggs in one basket.
Another popular option is to invest in land syndicates, opportunity funds or similar style ‘crowd funding’ opportunities where Australians can gain access to a share of a property development via passive investment in a trust that then manages the project for a fee then distributes profits back to investors.
A new wave of “fractional investing” also allows people to buy pieces of a single property and share in the ownership, rental income and capital returns.
Companies such as BrickX and DomaCom are among this new breed. BrickX, for example, divides a $1 million property into 10,000 hundred-dollar “bricks” that can be sold later to other investors on its platform.
Mr Koulizos says the “jury is out” on these new fractional property investing models, with potential for disputes down the track when one party wants to sell and others do not.
Other cheaper options for property investors include things such as carparks and marina berths, but their resale markets can be tricky with fewer potential buyers.
Silvertail Property Group managing director Nidal Rasheed has seen a shift in people seeking alternative property investment strategies because of affordability issues.
Many Australians have a desire to invest in property and are looking for cheaper alternatives to a house. There are many alternative methods out there to invest in property without taking on a mortgage and tying up large amounts of capital for the initial deposit.