This Real Estate Trend Is Surging—Here’s How To Invest Without Millions

You could spend $100 on a round of drinks, a pair of sneakers or a few months of Netflix Premium. Or you could buy a slice of a rental home in Cincinnati.

That’s the pitch behind fractional real estate investing. It’s not a new idea, but it’s gaining traction with a modern twist. Companies like Arrived.com—backed by Jeff Bezos, among others—make it possible for regular people to invest in single-family rental properties for as little as $100. You’re not buying the whole house or even managing it. You’re buying a tiny piece of it, hoping for passive income and long-term growth.

You earn money in two ways: from rent (your share of monthly income) and if the property’s value goes up over time. Nicer homes in sought-after locations often bring in more rent and grow in value faster, so your earnings could be higher. 

Still, just because you can invest doesn’t mean you should. Here’s what you need to know before you put your hundred bucks on the line.

How Fractional Real Estate Investing Works

When you invest through a platform like Arrived.com, you’re buying shares in a rental property, typically a single-family home. The platform pools your money with other investors to purchase and manage the home, then pays out rental income to the pool of investors, minus fees, which vary by platform.

You don’t deal with tenants, maintenance or property taxes directly. You sit back and wait for the rent checks to hit your account, in theory.

But those checks alone won’t make you rich.

“Platforms like Arrived.com do provide passive income, but realistically, returns from a small investment like $100 will feel negligible,” says Daniel Erb, founder and CEO of Strand Capital. “On average, fractional ownership will produce returns similar to a savings account or treasury bond.”

In other words, you might make a few extra bucks a year.

The Pros: Low Barrier, Real Estate Exposure

Fractional investing gives average people a way to dip into the real estate market without needing thousands of dollars or a mortgage. That’s a win if you’ve always wanted exposure to property but don’t have the time or cash to be a landlord.

“You get to brag about being a landlord without ever fixing a leaky faucet,” says Chad Harmer, founder of Harmer Wealth Management. “Just remember you’re betting on a single roof in a single neighborhood, and you’re trusting a young tech company to keep everything running.”

Tax benefits are another plus. Fractional owners typically receive the same tax advantages as full property owners, such as depreciation and expense deductions, proportional to their share in the investment.

There’s also potential for long-term appreciation, just like with any real estate investment. If home values rise and the property performs well, your share could increase in value.

“Fractional real estate investing is best suited for financially stable investors with deep practical knowledge of real estate and lower discretionary investment dollars,” says Erb. “This is due to the complexity, fees, risks involved in the asset class as well as the lower minimum investment.”

Who it’s best for:

• Someone patient and curious about real estate
• Investors who can park money long-term without needing liquidity
• Financially stable individuals looking to diversify with small discretionary amounts
• Those who understand the risks and complexity of real estate investing

The Cons: Fees, Illiquidity and Tiny Returns

Fractional platforms often promote simplicity and accessibility; however, their underlying structure can be more complex and costly than traditional investments.

“Expect multiple layers of fees: asset management fees, acquisition or sourcing fees, administrative fees and potential hidden expenses lurking in the fine print,” says Erb. “These costs quickly add up and will significantly reduce your net returns.”

If you’re investing just $100, those fees can swallow a good chunk of any gains.

And don’t expect to cash out quickly. “Your investment will likely have a lock-up period of at least five to seven years,” Erb says. “There’s generally no reliable secondary market for these investments, making early liquidation tough or impossible.”

That illiquidity is one reason many experts steer small investors toward other products, such as publicly traded REITs, real estate ETFs, high-yield savings accounts or CDs.

Key cons to consider:

• High fees: Multiple layers of costs can eat into returns quickly.
• Illiquidity: You may be locked into the investment for 5–7 years with no easy exit.
• Tiny returns: A $100 investment may generate minimal annual income.
• Lack of control: Investors have no say in how the property is managed.

How This Affects the Housing Market

While fractional platforms claim to be democratizing real estate, critics argue that breaking homes into micro-shares can harm first-time buyers.

“Fractional investing platforms can add more competition for single-family homes. This can push prices up in certain markets,” says Shmuel Shayowitz, president of Approved Funding. “That can make it tougher for first-time buyers. Making real estate investing accessible to everyone can also make buying less accessible for people who just want a home.”

Harmer echoed that concern. “Every house sliced into shares is one less starter home for a first‑time buyer,” he says. “It’s not the sole culprit, but it doesn’t help.”

Alternatives to Consider

If you’re interested in real estate but want liquidity, diversification and simplicity, experts suggest starting elsewhere.

Real estate investment trusts, or REITs, and real estate ETFs are good low-cost options. “You instantly own a sliver of hundreds of buildings spread across the country,” says Harmer. “You can cash out any weekday with two clicks.”

High-yield savings accounts and Treasury bonds offer lower risk and easy access. Micro-investing apps like Acorns or Stash let you invest in stocks with spare change. Robo-advisors such as Betterment and Wealthfront build ETF portfolios for as little as $10.

“With only $100, I would either purchase equity in a company I know deeply and have conducted research on or choose a low-cost passive product like an index fund,” Erb says.

That advice may not sound as flashy as becoming a digital landlord. However, if your goal is stability and growth, boring might be the better option.