3️⃣Barriers to Entry

Small investors often face significant challenges when attempting to enter the real estate market due to high capital requirements. Traditional real estate investments, such as buying residential or commercial properties, can require down payments of 20% or more, which, for a $300,000 property, translates to at least $60,000 upfront.

According to a study by the National Association of Realtors, the median down payment for first-time buyers is around 13%, still a substantial amount for many. These steep initial costs create a barrier for those with limited funds or lower income levels. Additionally, smaller investors may not have access to large portfolios or the leverage that institutional investors often utilize, further limiting their ability to compete.

Financing options are another significant barrier. Banks and financial institutions typically prioritize borrowers with strong credit histories and collateral, making it difficult for small investors to secure favorable loans.