6th November 2023

4 Passive Property Investment Strategies for Beginners

Passive property investment strategies for beginners: what it is and how you can get started.

Are you considering diving into property investing but you lack time to really get stuck in? Or maybe you’d like to start investing in property with a smaller amount of capital and test the waters, before fully jumping in the deep end?

Gone are the days when you needed to be on a property site 24/7. Why? Because of a little something called passive property investing. 

Passive property investing is the practice of investing in property through various different strategies that enable you to potentially see returns without having to deal with tenants, developers and all the other tedious parts that come into it. On the contrary, active property investing requires a hands-on approach where you’ll need to dedicate a lot of time and resources to the various different demands it requires.

In this article, we’ll be exploring four passive property investment strategies for beginners. Let’s dig in!

Four passive property investment strategies for beginners

Real Estate Investment Trusts (REITs)

How it works:

For the busy professional, Real Estate Investment Trusts, or REITs, is a potential way to gain exposure to the real estate market without the hassles of property management. These trusts allow you to invest in real estate just like you would in stocks. REITs often pay out dividends, providing you with that all important regular income stream. 

Minimum cash required:

The minimum amount of capital required to invest in REITs in the UK can vary depending on the specific REIT and the investment platform or brokerage you choose. Some investment platforms allow you to start investing in REITs with relatively low amounts, often as little as £1 or even less, whilst others may have a minimum of £5,000 for example. It’s essential to review the investment platform’s terms and conditions as well as the specific REIT’s requirements and hidden fees.

Why it’s a good passive property investment strategy for beginners to consider:

REITs can be an ideal choice for beginners because it requires minimal upfront capital compared to purchasing physical properties. Plus, the regular dividend payments can contribute to a steady income while offering the opportunity for long-term growth. Learn more about how REITs could benefit your investment journey in our upcoming webinar here.

Real Estate Crowdfunding

How it works:

Real estate crowdfunding platforms offer opportunities for you to participate in property projects without the massive upfront capital or hands-on involvement. As a beginner, this strategy lets you diversify your investment across various real estate projects, mitigating risk. For example, you could invest in a property development project such as a large building being converted into flats, or even a commercial project such as a shopping mall. 

Minimum cash required:

Some real estate crowdfunding platforms may allow you to start investing with as little as £10 or £100, while others might have higher minimum investment thresholds. The specific minimum investment amount will depend on the platform’s policies and the particular investment opportunities available.

Interested in learning more? Check out Propelle’s real estate crowdfunding opportunities here.*

Why it’s a good passive property investment strategy for beginners to consider:

If you’re not a high net worth or a sophisticated investor (defined by Investopedia as a type of investor with significant net worth and experience) rest assured, you can still dip your toe in crowdfunding. You’ll have to certify that you won’t invest more than 10% of your assets, as this is a sophisticated investment opportunity. Once you have invested in at least two similar deals, you are considered a ‘sophisticated investor’ and can start investing more. It’s a strategy that’s increasingly accessible to those looking to build wealth without the complexities or time requirements of property management. The key thing is choosing a platform which provides online accessibility, transparent project details, and regulatory oversight to provide you with a level of ease, transparency, and security. 

Real Estate ETFs

How it works:

Real Estate Exchange-Traded Funds (ETFs) provide a straightforward and flexible way for beginners to access the real estate market. (Not sure what ETFs are? We’ve written a whole course on it. Check it out here). These funds are designed to replicate the performance of real estate indices, much like stock ETFs mirror the stock market. When you invest in a Real Estate ETF, you’re essentially buying shares in a diversified portfolio of real estate assets, such as commercial properties, residential buildings, and real estate investment trusts (REITs). This approach allows you to gain exposure to real estate without the need to purchase and manage physical properties.

Minimum cash required:

One of the appealing aspects of Real Estate ETFs is that they typically don’t have high minimum capital requirements, making them accessible to a wide range of investors. In the UK, you can start investing in Real Estate ETFs with as little as the price of a single share, which can vary in cost depending on the specific ETF you choose. This low entry threshold enables beginners to dip their toes into real estate investment without substantial capital.

Why it’s a good passive property investment strategy for beginners to consider:

As a beginner, you might not have the time, expertise, or substantial capital required to dig into active property investing. Real Estate ETFs offer an attractive alternative by allowing you to participate in the property market without these challenges. This diversity can also provide a level of liquidity, as Real Estate ETF shares are traded on stock exchanges like any other stock. 

Real Estate Syndication

How it works:

Real Estate Syndicates offer a collaborative and hassle-free approach to property investment. In a syndicate, a group of investors pool their resources to collectively invest in a real estate project. These projects can include purchasing residential properties, commercial buildings, or development ventures. The process typically involves a manager or sponsor who identifies, acquires, and manages the property, while the investors (you–maybe) contribute capital. Returns on the investment are distributed according to each investor’s share (so if you contribute 10% of the investment, you get 10% of the potential returns), providing a way for beginners to participate in larger and potentially more profitable real estate ventures.

You may be wondering if this is the same as a joint venture and we understand why you’d think that, but no. Here’s the deal: joint ventures are ongoing partnerships, whereas syndicates usually invest in one-off projects. Once the project is complete, the syndicate can be dissolved. 

Minimum cash required:

Like most of the passive property investing strategies we’ve mentioned, the minimum capital needed to participate in a syndicate can vary depending on the specific project and the syndicate’s terms. However, you’d expect to need more capital (a few thousand) than the other options to get things off the ground.

Why it’s a good passive property investment strategy for beginners to consider:

Real Estate Syndicates are a valuable option for newcomers to property investment because they provide a way for you to access more extensive and potentially more lucrative property projects without the need for extensive capital or expertise. By leveraging other people’s experience and management skills (i.e. the manager or sponsor), it reduces the complexities often associated with property management. 

Things to consider

Whilst passive property investing offers several advantages, it’s important to be aware of the associated risks. One primary risk is the potential for market fluctuations, which can impact the value of your property investment. Additionally, you might have limited control over property management decisions, leaving yourself reliant on property managers or market conditions. Property markets can also be sensitive to economic changes, such as interest rate fluctuations or shifts in local demand. Therefore, while passive property investing can offer the potential for good returns, it’s crucial to carefully consider these risks and conduct thorough due diligence.

How to get started on your passive property investment journey 

Now that you’ve explored four different passive property investment strategies for beginners, it’s time to Take Action! Wondering what your next steps should be? We’ve got you covered:

  1. Still want to learn more about property investing? Check out our FREE interactive courses to help you level up your knowledge.
  1. Join us for an exciting webinar on Wednesday 15th November 2023 with property investing experts Ayesha Ofori and Anna Pearce who will be sharing all their knowledge of passive property investing. (If you’re reading this after the webinar date, watch the replay via the Propelle Pro Membership here).
  1. As a busy woman, your time is precious. Propelle understands this, and that’s why we’ve introduced a passive property offer tailored to meet your investment goals. Ready to start investing? Check out our property crowdfunding deals here.* 

Don’t miss the chance to join the growing community of empowered women building wealth through passive property investment (and other assets). If you have any further questions and would like to ask Propelle or our community members any questions, pop your questions in the community chat. We look forward to assisting you! 

*Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong.