It’s a common assumption that you need large amounts of capital to invest in property. With the likes of buy-to-let being a particularly popular property investment route for most of the last 15 years, if you're looking to mortgage a property you're going to generally need at least 25% of the purchase price of a property as a deposit.
Using the average UK property price of £226,756 purely as an example, that's a deposit of £56,689
Now if this is the route you go down, there's no doubt that for most people, this amount of money isn't just a drop in the ocean and you're going to need a large amount of capital to get started (plus, the above doesn't take into account legal feels, surveyor fees, etc) - and that's fine, if you have it.
Just one example of how the housing market can be considered particularly 'difficult' to enter, the reality, especially today, is that it can be considerably easier, simpler - and cheaper - to get started in.
But before we look at the routes available to property investors who may not have tens of thousands of pounds to get started, there's one critical question to ask first.
And that's whether you should invest into property with only a small amount of money.
Understanding your personal circumstances
When you're making any investment, one of the key questions to ask yourself is how much spare capital do you have - or can you make - available? Or more specifically, how much spare capital do you have / can you make available without it affecting your lifestyle.
If saving an extra £100 from your monthly salary means that day-to-day life is now becoming a struggle and you're unable to comfortably pay bills, investing into property or any other opportunity is never going to be recommended.
But if you have £1,000 stored away ready for a rainy day - on top of an emergency fund, for instance - it would be completely reasonable to consider putting this capital to work and seeing a potential return.
Investing is an entirely personal choice and in many ways is about individual preferences. You have to make sure you are in a suitable position financially to invest and the risks you're potentially opening yourself up to aren't ones that will cause harm to the point that they affect your life negatively.
As is often said, you should never invest more than you can afford to lose. If losing that money would completely change your life and mean that you then have to adapt your lifestyle drastically - think selling your house - investing into such an opportunity shouldn't be a consideration at this point in time.
But have capital sat doing nothing and you want to try and make it do more for you? Putting it to work into a property investment opportunity could undoubtedly be an attractive proposition.
The meaning of "a small amount" differs for everyone
Now on the assumption you are in a position to invest into property, looking back to the original question, we now need to look at what you class as "a small amount" in terms of available capital.
This differs for everybody, depending on everything from salary through to living expenses. What one person classes as "a small amount" could very realistically be someone's annual salary. And so it's important to understand what this means to you, as the property investment opportunities available can be directly dependent on the amount of money you can invest.
So for instance, if you class ‘small’ as being £1,000, generally speaking you'll have the ability to invest in the majority of property opportunities available.
However, if you're classing ‘small’ as £100, then you are going to be more restricted - but it's still entirely possible. You just need to explore the options further to find those right for you both in terms of minimum investment amount and risk profile.
For example, we recently closed out a residential property development investment opportunity on the GrowthFunders platform, with a minimum investment amount of £1,000. This particular opportunity is targeting a 1.5x money return within 18 to 22 months, therefore within two years as an investor you would expect to see a return of £1,500 - and so if you had £1,000 stored under the mattress not doing anything, seeing a 50% return on it within a relatively short period of time is undoubtedly attractive.
Alternatively, if you were investing smaller amounts, you could realistically invest £100 into a property fund, some property crowdfunding opportunities, or buy shares (or part thereof) in a property company. These are all opportunities that are completely accessible to anybody wanting to invest. Some didn't exist - or weren't as readily accessible as they are - several years ago, and that's one of the things I love about this industry. If you want to invest, regardless of the sum you have available, it's definitely achievable.
Small investments can be great for exploring new markets
One related point to talk about is that making small investments can actually be a really beneficial thing to do.
For new investors - or experienced investors entering new markets - investing can be daunting. It's the unknown of anything. It's always concerning.
But by investing small amounts of capital into various opportunities, you get the ability to test the waters. Not only is this a great way to get started as a new investor, but for experienced investors it allows you to diversify your investment portfolio by exploring new assets, ultimately mitigating your overall level of risk and exposure by investing across multiple sectors.
And if you get a taste for investing into property and become more experienced in it, you can look at investing larger amounts into projects to potentially see greater financial return. It's a simple way to build your understanding, awareness and confidence of an asset class.
For example, if you invested 100% of your capital into a single investment opportunity, should that investment not produce the return you anticipated and you lost the capital, you need to write off the loss and start again. Most likely in a different market.
However, if you split your capital up and invested 10% into 10 different opportunities, you're mitigating risk and getting a greater understanding of which investments are working for you.
And this is all achievable with property, whether you're a previous property investor or not.
Perhaps you're a regular EIS investor but want to build out your portfolio with property. You could invest a portion of your EIS-based gains (which are all free of Capital Gains Tax) into a number of property opportunities and monitor them, expanding your portfolio based on where you see the most success.
But even if you're an experienced property investor who's focused on buy-to-lets or off plan purchases, you can achieve considerable diversity just by looking at the wider property investment opportunities. And starting with a small investment into an opportunity type you're not experienced in is undoubtedly a respectable approach.
Making the decision to invest in property
Deciding on whether to invest in property or not is entirely a personal decision and should be a choice made only when all aspects have been considered (and professional advice taken).
But there is no doubt that investing has never been easier and more accessible to the general public than ever before. With fintech companies and alternative finance platforms becoming the norm, it's really become much simpler for you to invest - and importantly here, to invest with small amounts of money.
Whereas before property and real estate investments were generally only for those with plenty of spare capital to invest and the time to seek out the best deals, today that's anything but the case. Whether you want to invest £100 or £100,000, there are numerous property investment opportunities suited to your needs.