A lot of potential investors never get into the property market because they don’t think they have enough funds to get started. But you don’t need inherited millions to be a property investor. In this guide, we’ll look at five ways to get started in Australian real estate with as little as $10,000.
1. ASX-Listed A-REITs
If you’re a beginner without a lot of capital, Australian Real Estate Investment Trusts (A-REITs) are an accessible way to get into property investment without also taking on management responsibilities. With $10,000, you can build a diversified portfolio across multiple sectors.
What are A-REITs?
In short, A-REITs allow you to invest in real estate without directly purchasing, managing, or maintaining physical properties. Think of them as a mutual fund but specifically focused on real estate.
Key Characteristics of A-REITs
1. Structure and Composition
A-REITs are listed companies on the Australian Securities Exchange (ASX) that own, operate, or finance income-generating real estate properties. Typically, they include a diverse range of property types including commercial offices, shopping centres, warehouses, residential complexes, and speciality properties like hotels and data centres.
2. Investment Mechanism
A-REITs work by pooling money from multiple investors to purchase and manage real estate assets, selected by professional managers. Those properties generate revenue through rent, value appreciation, and strategic development or redevelopment, benefitting all the investors.
3. Unique Tax Benefits
With various exemptions and deferments, A-REITs are deliberately structured for tax efficiency, and they must distribute at least 90% of taxable income to shareholders.
Benefits for Investors
1. Accessibility
One big advantage of an A-REIT for you as an investor is that barriers to entry are much lower. You can start with as little as $500-$1,000 and won’t need to worry about management responsibilities, maintenance, or the legal rigmarole that comes with a fully-fledged property purchase.
2. Diversification
As well as accessibility, an A-REIT gives you instant diversification. Whereas a standard investment will be in a single property, putting all your eggs in one basket, an A-REIT spreads your risk over multiple properties. That means you’re less exposed if the market collapses for a specific area or property type (although it means you can’t take advantage of a specific boom either).
3. Liquidity
A-REITs generally give you more flexibility than standard real estate investments. A-REITs are bought and sold on the Australian Securities Exchange (ASX), meaning you can convert your investment to cash more quickly than with physical property.
4. Professional Management
If you’re less experienced, an A-REIT also gives you the benefit of having your portfolio managed by an experienced professional. Although you lose a little control, you do gain that expert selecting and managing your properties and risk, which you may find more reassuring than relying on your own judgement.
Types of A-REITs
There are three main types of A-REIT:
1. Passive A-REITs, which focus on existing, income-generating properties. These are generally more stable and consistent, with a lower risk profile, e.g. shopping centres or office buildings.
2. Active A-REITs, which involve more development and active management, such as urban regeneration projects. These are higher risk but can deliver higher returns.
3. Specialised A-REITs, which bring sector-specific expertise and concentrate on specific property types such as healthcare or industrial property REITS.
Potential Risks
Like any investment, an A-REIT comes with risk. Markets can be volatile, and the property market fluctuates even in normal conditions. Remember that, with an A-REIT, you hand over control to an extent and rely on someone else to read the market. Economic conditions change, interest rates change with them, and all could have a knock-on effect to you.
What are the Best A-REITs?
You should choose an A-REIT that aligns with your goals and circumstances, but some of the most established A-REITs include:
- Goodman Group (GMG): Australia's largest REIT, specialising in industrial and logistics properties.
- Scentre Group (SCG): Owner and operator of Westfield shopping centres across Australia and New Zealand, focusing on premium retail destinations.
- Stockland (SGP): Diversified property group with major focus on residential communities, retirement living, and retail town centres.
- Dexus (DXS): Leading office tower owner with an expanding industrial portfolio, primarily focused on major CBD markets.
- Vicinity Centres (VCX): One of Australia's largest retail REIT managers with a portfolio ranging from luxury destinations to neighbourhood shopping centres.
- Mirvac Group (MGR): An integrated property group that balances a high-quality investment portfolio with a residential development business across major urban markets.
- Charter Hall Group (CHC): A property fund manager and investor with a diverse portfolio across the office, industrial, retail and social infrastructure sectors.
- GPT Group (GPT): One of Australia's oldest REITs with holdings across retail, office and logistics properties in major metropolitan markets.
- Lendlease Group (LLC): A global integrated property and infrastructure group with major urban regeneration projects across Australia, Asia, Europe and the Americas.
- Charter Hall Long WALE REIT (CLW): A group focused on properties with long weighted average lease expiries (WALEs) across different sectors including telecommunications, government, and healthcare.
If you’re looking to invest in the residential sector, Mirvac Group (MGR) includes a balance of residential and commercial, Stockland (SGP) focuses on residential communities alongside its commercial assets, while Lendlease Group (LLC) combines both global residential development and urban regeneration projects.
2. Property ETFs
Property ETFs could give you an even broader diversification than A-REITs. Why? Because they hold multiple A-REITs and other real estate assets in a single fund. That can mean lower volatility and less exposure to a single market, making them ideal for beginners, especially with a smaller fund like $10,000.
What are Property ETFs?
Property ETFs give you exposure to real estate markets without the need to directly purchase or manage physical properties. They trade on stock exchanges, much like individual stocks, but instead of buying a single asset you get a mix of real estate-related securities, including A-REITs and property-related stocks.
Key Characteristics
ETFs primarily invest in REITs, property development companies, and real estate-related securities, so you have an immediate diversification across multiple real estate assets.
Most property ETFs distribute income on a quarterly basis, typically with a 3-5% annual yield. That could mean a reliable cash flow alongside potential capital growth. For example:
- Vanguard Australian Property Securities ETF (VAP): Australia's largest property ETF, where you’ll be invested in the ASX 300 A-REIT Index with an ultra-low management fee (0.23%), spreading your investment across 30 property securities.
- SPDR S&P/ASX 200 Listed Property Fund (SLF): A popular fund that tracks the S&P/ASX 200 A-REIT Index with a focus on the largest Australian REITs and a 0.16% management fee.
- VanEck Vectors Australian Property ETF (MVA): A fund tracking the MVIS Australia A-REITs Index with a 0.35% management fee and “equal-weighted” methodology, meaning it spreads your risk equally across funds, rather than concentrating it in the largest REITs.
- iShares Australian Listed Property Index Fund: Tracks the S&P/ASX 200 A-REIT Index with a 0.20% management fee and strong liquidity for easy buying and selling.
3. Australian Fractional Property Platforms and Property Development Crowdfunding
Fractional Platforms are innovative but can be riskier. By investing in a crowdfunded property development, even with $10,000 or less, you can essentially pool together with other investors to invest in a property that would be beyond your means as individuals.
This helps beginners access specific properties and developments, but that means you have all the risk that comes with putting all your money in one property, and all the lack of control that comes with any property where you don’t hold management control.
Top Performing Fractional Platforms:
Crowdfunding is still relatively new and fast-moving, with new entrants all the time, but the best-performing platforms include:
1. BrickX
The market leader, established since 2014, with a robust residential portfolio. Regulated by ASIC, with a mature secondary market for reselling, it provides the most consistent performance and lowest risk for beginners, with historical returns ranging from 7-14% annually.
2. Bricklet
Unlike rivals, Bricklet offers actual title registration for fractional ownership, giving you an added layer of security. With entry points from $1,000, it focuses on growth corridor properties in Brisbane and Melbourne.
3. DomaCom
Offering one of the most diverse approaches, DomaCom covers residential and commercial properties, with sub-funds returning 8-10% annually through rental income and value appreciation, potentially offering you a more balanced strategy.
4. VentureCrowd
Targeted at more specialised markets, VentureCrowd often features higher-risk, higher-reward opportunities. They target returns of 15-20% on select projects, with a minimum entry point of $2,000, so it will suit you if you’re comfortable with risk and want more aggressive growth.
Curious to learn more about property crowdfunding platforms? Explore our in-depth guide where we analyse each platform's investment model, minimum investments, historical returns, and liquidity options for each crowdfunding option.
4. Australian Mortgage Funds
Mortgage funds pool capital from multiple investors to finance property loans, secured against real estate property. Essentially, that means you and others become a lender to fund a purchase or development.
Most mortgage funds pay out on a regular monthly or quarterly basis, which might be beneficial if you’re looking for consistent income. They don’t offer the same growth potential of property equity investments, but they give you stability and the returns are generally much higher than savings accounts.
How Mortgage Funds Work
Mortgage funds start by combining your resources with other investors, each of whom usually contributes at least $5,000 - $10,000.
Then, a professional fund manager lends the money to selected borrowers based on their creditworthiness, the property value, the loan-to-value ratio (typically 60-80%), and the risk. Crucially, loans are secured against the property itself.
To mitigate risk, mortgage funds tend to diversify across multiple properties, focusing on first-ranking mortgaged and using sophisticated risk management algorithms.
Mortgage funds also follow strict compliance frameworks, regulated by bodies like the Australian Securities and Investments Commission (ASIC). This includes mandatory reporting, audits, and protection mechanisms.
Benefits for Stakeholders
A mortgage fund gives you low-barrier access to the property lending market and regular income, with the reassurance of professional portfolio management.
Borrowers, on the other hand, get access to an alternative source of finance, usually with more flexible criteria, faster approval times, and competitive interest rates.
Return potential varies, but as an indication more conservative funds typically deliver 3-5% annually, while higher risk development funds deliver 7-9%.
Mortgage Fund Options in Australia
There are several mortgage fund options that have shown consistent performance such Trilogy Monthly Income Trust, MAP Real Estate Securities Fund, and Australian Unity Property Income Fund.
Each fund offers a different approach and unique features, including different minimum investment requirements, fee structures, and investment strategies. You should always:
- Review the fund’s most recent Product Disclosure Statements.
- Consult with a qualified financial advisor.
- Carefully assess your personal investment goals and risk tolerance.
- Examine the fund's historic performance and current investment approach.
5. First Home Buyer Deposit Preparation
If you’re using your $10,000 as the foundation for a home deposit, you need to take a strategic long-term approach and leverage government incentives for first-time buyers. For example:
- The First Home Super Saver Scheme (FHSSS) lets you contribute up to $15,000 per year (maximum $50,000 total) into your superannuation for a future first home purchase. The tax advantages can effectively boost your $10,000 by 15-30% compared to regular savings, depending on your tax bracket.
- High-Interest Savings Accounts dedicated to home deposits like Westpac's Life account (3.5% p.a. for 18-29 year-olds saving for a first home) and ING Savings Maximiser (4.0% p.a.), help your $10,000 grow faster.
- Term Deposits with institutions like Judo Bank (4.5%+ for 6-12 month terms) or Macquarie Bank offer competitive rates for dedicated deposit savings.
Each of these schemes potentially helps you grow your deposit much more quickly than a conventional savings account. You can get additional government support in the form of:
- First Home Owner Grants vary by state but could give you $10,000 to $20,000 for a new property. Your initial $10,000 can qualify you for grants once you've saved the required minimum deposit.
- Stamp Duty Concessions or Exemptions for first home buyers in most states can save $15,000+ on property purchases, effectively increasing the value of your initial savings.
- The First Home Guarantee Scheme (formerly First Home Loan Deposit Scheme) lets you purchase with just 5% deposit without paying Lender's Mortgage Insurance, potentially saving $10,000-$15,000 on a median-priced property.
As a beginner with $10,000, therefore you could contribute $6,000 to the FHSSS and keep $4,000 in a high-interest savings account.
This gives you time to research high-growth areas and property types. First home buyers in Queensland and Tasmania can often enter the market with smaller deposits, especially when combined with First Home Owner Grants for new properties or house-and-land package.
However you choose to enter the property market, the key question is how to finance your purchase(s). If you plan to rent out your property, you could also consider Futurerent as an alternative to traditional loans. Futurerent gives you an advance on the rent you can expect from your property, helping you invest without the delays and paperwork of a traditional home loan.
When making decisions about investments, finances or tax, always consult with a qualified financial advisor to get tailored advice and verify rates, grants, and investment opportunities. The information in this blog is a guide only. Regulations and opportunities may change, and you should always seek professional advice.
FAQs
How do A-REITs work for small investors with $10,000?
A-REITs (Australian Real Estate Investment Trusts) work for small investors by pooling money from multiple investors to purchase and manage income-generating real estate properties. With $10,000, you can build a diversified portfolio across multiple A-REITs like Goodman Group, Scentre Group, or Mirvac Group. A-REITs offer accessibility (starting with as little as $500-$1,000), instant diversification across multiple properties, liquidity through ASX trading, professional management, and tax benefits as they must distribute at least 90% of taxable income to shareholders. They're ideal for beginners who want exposure to real estate without management responsibilities.
Which property ETFs are best for Australian real estate investors with $10,000?
For Australian real estate investors with $10,000, the some of the most popular property ETFs include Vanguard Australian Property Securities ETF (VAP) with its ultra-low 0.23% management fee and exposure to 30 property securities in the ASX 300 A-REIT Index; SPDR S&P/ASX 200 Listed Property Fund (SLF) with a 0.16% management fee focusing on the largest Australian REITs; VanEck Vectors Australian Property ETF (MVA) with its unique "equal-weighted" methodology that spreads risk equally across funds; and iShares Australian Listed Property Index Fund which tracks the S&P/ASX 200 A-REIT Index with a 0.20% management fee and strong liquidity. Property ETFs offer even broader diversification than individual A-REITs by holding multiple A-REITs and other real estate assets in a single fund, potentially reducing volatility.
How can I use $10,000 to prepare for a first home purchase in Australia?
You can strategically use $10,000 to prepare for a first home purchase by contributing up to $15,000 per year to the First Home Super Saver Scheme (FHSSS), which offers tax advantages that can boost your savings by 15-30%. Keep some funds in high-interest savings accounts like Westpac's Life account (3.5% p.a. for 18-29 year-olds) or term deposits with competitive rates. Research first-time buyer government support including First Home Owner Grants ($10,000-$20,000), stamp duty concessions, and the First Home Guarantee Scheme that allows purchases with just a 5% deposit without Lender's Mortgage Insurance. Consider dividing your $10,000 between the FHSSS and high-interest savings while researching high-growth areas and property types.
