If investing in real estate has always been a dream of yours, but you only have a limited budget, you'll be happy but surprised to know that you can get started by attending auctions and considering fractional ownership. "House hacking" with an accessory dwelling unit (ADU) is another option.
Investing in income-generating properties can be particularly lucrative nowadays, as the demand for both the residential and commercial real estate sectors remains strong.
As an article by the New York Post points out, as of the second quarter of 2025, 35% of Americans rent their homes. They choose to remain renters because, to these individuals and households, renting appears to be more of a bargain compared to buying a home.
If you take the time to explore options outside of traditional avenues to real estate investing, you can get started on this venture despite having a smaller budget.
Is It Really Worth Investing in Real Estate?
Yes, investing in real estate is worth it because it's a tangible investment that appreciates over time. If rented out to ideal tenants, it also has the potential to deliver a steady cash flow from rental income.
Data from NCHStats, for instance, shows that home values in the U.S. have risen by an average of around 8% to 9% per year within the last five years. Over the past decade, the increase was around 6% to 7%.
Rent prices usually follow an upward trend, too. As explained by the American Apartment Owners Association (AAOA), the average rent increases 3% to 5% each year. Today, the monthly rent in the U.S. averages around $1,500.
How Much Is Enough to Invest in Real Estate?
The traditional way to invest in real estate is to purchase properties (for hundreds of thousands of dollars) and renovate or remodel them. Once "move-in ready," you can rent them out to residential or commercial tenants.
The above method is still widely in use by many other investors, but as you may have surmised, it involves a massive amount of capital.
Fortunately, you can get started on investing in real estate, whether you only have $1,000 or $100,000+, says Investopedia.
- $1,000: Real estate investment trust (REIT)
- $5,000: Real estate investment group (REIG)
- At least $100,000: Traditional way of buying and managing rental properties (particularly fixer-upper homes and buildings)
What Are Some Surprising Ways to Start Investing in Real Estate in 2026?
REITs, REIGs, and buying distressed properties for sale (fixer-upper) are all viable methods to invest in real estate this year. However, they're not the only ways; you can explore other "lesser-known" strategies, from seeking below-market deals at real estate auctions to co-ownership and house hacking.
Buying Properties at Real Estate Auctions
Real estate auctions offer a distinct, unique way to purchase real estate investments by granting you access to properties whose selling prices are lower than their actual market value. The discounted rates aren't always due to distressed states; in many other cases, they're in good condition, but:
- The seller's priority is not to make profits but to complete a swift and guaranteed sale
- The property is difficult to finance
- The seller is a charitable organization or a corporate entity
You can get more information on what these auctions are about and what you can buy from them if you visit Cassel & Associates via their website.
Fractional Ownership
The term "fractional ownership" refers to the shared ownership of an asset, such as a real estate property, among a group of people.
Each member of the group, also called a "co-owner," holds a part of the asset, meaning they own a percentage or share. An example is 20% each across five co-owners, or 10% across 10.
There are also highly innovative, technological approaches to fractional ownership in real estate investments, such as through "tokenized" models. Blockchains (immutable, decentralized, and transparent digital ledgers) power these systems, dividing real estate properties into thousands of digital tokens.
Through tokenization, a high-value property can have thousands of "co-owners," with the investors having access to a share of the property for a minimal amount (e.g., $50 or $100 per token).
House Hacking With an ADU
Another lesser-known way to start investing in real estate in 2026 is by adding an ADU to your property, "glamming" it up, and renting it out. With this strategy, you get the benefit of:
- Increasing your property's value (with the addition of the ADU)
- Expanding the equity you have in your property
- Earning investment income by renting out the ADU as a short-term or vacation rental
Just remember that in most states and municipalities, ADU additions require building and zoning permits. Check with your city or state planning department to determine all requirements you must satisfy for your ADU project.
Frequently Asked Questions
What's a Downside to Investing in Real Estate?
Before the inception of REITs and tokenized ownership, one of the biggest drawbacks of investing in real estate was the huge amount of capital needed. You still need quite a hefty sum of money if you'd like to invest the traditional way, but remember that you can get below-market deals through auctions.
Another downside is illiquidity. Unlike your other options, such as bonds, stocks, and publicly traded assets, which you can sell almost instantly on any major exchange, real estate can take weeks, months, sometimes even years, to convert into cash.
What's Riskier, Stocks or Real Estate?
Stocks often come with higher risks than real estate investments, as they're intangible and have higher emotional trading and market volatility risks. Market crashes can cause the prices of stocks to undergo a significant, rapid decline, resulting in massive "paper wealth" losses.
The upsides to stocks, on the other hand, are their higher liquidity, lower entry costs, and potential for significant returns. You can sell them on any business day, during business hours, and some brokers even offer 24/5 services (trading 24 hours for Mondays through Fridays).
Consider Investing in Real Estate Today
Nowadays, investing in real estate is no longer limited to just buying properties, improving them, and renting them out or selling them for a profit. You can now take advantage of auctions to find below-market deals, become a "fractional" investor, or "house hack" with an ADU.
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