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A million-dollar home often conjures images of a mansion, but in Silicon Valley, things can be a bit different.
At 10036 Carmen Road in Cupertino, California, sits a one-bedroom, one-bathroom home with 384 square feet of living space. The tiny home went viral in April 2024 due to its $1.7 million listing price. But despite the sky-high price tag, listing sites show the home has sold for considerably more at $2 million.
The tiny house received an “insane amount of attention,” listing agent Faviola Perez told SF Gate. But she insists the key to the property’s value is in its land.
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The description on Zillow highlighted the property’s location as being in a top-tier school district, its 7,841-square-foot lot surrounded by $4 million to $5 million homes and its close proximity to major commuting routes, underscoring the land’s significant investment potential.
This story showcased the soaring values in certain real estate markets, but it’s important to remember that investing in real estate doesn’t always require buying a house. Here’s a look at three alternative strategies that don’t involve hefty upfront investments.
Invest using a crowdfunding platform
Crowdfunding has become a buzzword in recent years. It refers to the practice of funding a project by raising small amounts of money from a large number of people.
These days, many crowdfunding investing platforms allow you to own a percentage of physical real estate — from rental properties and commercial buildings to parcels of land.
Because of the higher stakes involved in some real estate crowdfunding, some platforms — like First National Realty Partners(FNRP)— require investors to be accredited.
At a minimum investment amount of $50,000, FNRP allows accredited investors to get their hands on necessity-based commercial real estate without having to do the legwork of finding deals on their own.
FNRP’s team of experts have developed relationships with the nation’s largest essential-needs brands, including Kroger, Walmart and Whole Foods and they will act as the deal leader through their entire life cycle while you passively collect potential distribution income.
If you’re not an accredited investor, certain platforms allow you to invest small sums, so you can still enjoy the convenience of crowdfunding — and Arrived is one of those platforms.
Backed by world-class investors like Jeff Bezos, Arrived allows you to invest in shares of rental homes and vacation rentals without having to deal with all the work and risk that can come from having tenants.
You can start by browsing a curated selection of homes, vetted for their appreciation and income potential.
Once you find a property you like, choose the number of shares you want to buy and get started with as little as $100.
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Private real estate funds
With private equity real estate funds, you can get access to a wide range of different real estate investments, such as residential, commercial or real estate debt, meaning you aren’t keeping all of your money tied to the fortunes of a single property.
For investors seeking monthly dividends, Arrived also offers the Arrived Private Credit Fund, which allows you to invest in short-term loans that finance real estate projects, such as renovations, property rehabs or even new home construction.
The fund generates cash returns by collecting interest payments on the loans and distributing monthly payouts to investors. All of the loans are secured by residential housing as collateral, so even if the borrowers default, the underlying property can be sold to keep the fund healthy.
Historically, the Arrived Private Credit Fund has paid 8.1% annualized dividends to investors.
Invest in ETFs
Picking the right REIT or crowdfunded deal requires plenty of due diligence on your part. If you’re looking for an easier, more diversified way to invest in real estate, consider exchange-traded funds.
You can think of an ETF as a portfolio of stocks. And as the name suggests, ETFs trade on major exchanges, making them convenient to buy and sell.
The beauty of ETF investing is its accessibility — anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time with tools like Acorns, a popular app that automatically invests your spare change.
Signing up for Acorns takes just minutes: link your cards and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio.
With Acorns, you can invest in a dividend ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.