How to invest in real estate without using a mortgage?

Usually real estate investors use mortgages to buy properties and have developed the notion of “good debt” how can Muslims get involved without using a mortgage?

Crowdfunding is an option. there’s a company called Yielders that Umer Suleman I think recommend

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alternatively you could find halal real estate ETFs which are a liquid way of getting involved

Another way is to buy property in a place that you can afford. For example outside of London you can find houses for less than 100k

A REIT is a company that owns and manages property on behalf of shareholders. REITs provides a way for investors to invest in a property portfolio without having to buy these properties directly.

Shariah compliant REITS are pretty much similar to the conventional ones. However, they must also go through property and tenancy screening. This means that the properties selected in an Islamic REIT will only be based on the compliance of their activities.

And of course, a REIT is usually managed by a shariah board to ensure that it is compliant.

The issue with debt-based crowdfunding is that investors expect the borrowers to repay them the full amount including the interest. This will make it haram from a shariah perspective.

An alternative would be to go for a form of Islamic debt-based crowdfunding. This could be achieved through a certain mode of halal financing such as tawarruq or murahaba agreement.

That’s a good idea too

I was thinking more ownership based crowdfunding. Where you all buy a share. I believe that is what Yielders do

Another would be VC venture capital investments. Something like Maydan capital?

If you go to Newcastle, a 3 bed house is around 80k, my family was thinking of getting one there but we have zero experience and no one to help us manage it if an emergency were to ever happen. But yes, you are right, outside london and beyond luton or mylton keynes is your best shot

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This is a good shout. And then make passive income and keep growing businesses until you make the money back and keep going from there.

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You can always start small. Get into rent-to-rent properties, and have HMOs and service accommodations all over London and outside, keep building your properties, and then you will be able to make enough money to invest in real estate. but you have to start small. you will also have a portfolio and all you need is an initial 5k - 10k to get everything started.

How do HMOs work? I’ve always been curious

HMO’s are “housing multiple applicants”… you buy or rent a property that has around 3 bedooms, plus a living room, you convert the living room into a bedroom as well, you ensure that the downstairs and upstairs has a toilet and a shower, ensuite ones can also give you a boost, then you rent each room say around £500, thats an easy 2k a month coming into your pocket, then you minus that with the weekly cleaning of the cleaners that will clean the kitchen and if there is a dining room. You also have contracts in place to ensure everyone is sticking to guidelines, you also pay the rent that the owner wants (if you are renting the property) … you can make a good £500 profit for each month, have multiple, you can easily make 10k a month. And the best part is, it can all be automated as well so you never have to do anything and you can pay HMO services to deal with all your properties as well.

Only thing is, you will have to do some of the hard work in the beginning. (like making it look nice and presentable)

A quick way to make money is to rent properties, turn it into service accommodations and make a lot of money through that. Service accommodation is basically a hotel, but without the staff and its generally a flat. Add that to, airbnb, zoopla and everything and you can easily get clients everyday, charge £150 a day, you can make a lot of money.

again, everything is automated, the cleaners, the websites and everything. Even the key handling as well. You can easily make passive income, but you will need around £5k to do it at the start.

Rent 2 Rent is a good idea. Good way of making money

If you can Rent 2 Rent a few properties, do them up and rent them out it’s a good way of making a side income

Whilst this is a way to get RE exposure on your portfolio it simply is not the same as being able to develop a portfolio of 5 mill with minimum usage of your own money.

This company does give abit more direct exposure to RE but again has no where near the profits of the haram method.

In the haram method, an individual will take a mortgage on a property and renovate it. They will then revalue the property presumably the value has increased. They will then remortgage the property getting returned to them most/some of their initial deposit and renovation costs. Thus the property cost minimal money. They will then rent the property at higher than the mortgage repayments, thus quickly making back their initial investment and gaining a very large return on investment.

All of this is made possible by the leveraging of debt.