How to Invest 10k in Real Estate (6 Top Options) • Benzinga (2024)

Whether investing in real estate for your career, your retirement or your portfolio, there are many possibilities for ongoing passive income. Getting started doesn’t always mean purchasing real property outright. There are ways to invest $10,000 in real estate using other avenues while still getting your foot in the door.Keep reading to learn how to invest 10k in real estate to put your money to good use.

Is Real Estate a Good Investment?

Investing in real estate is a great long-term or short-term money maker, and opportunities are everywhere. Many people think you need lots of money to get started when you can really do a lot by investing $10,000. Real estate investing doesn’t have to be hard or strap your bank account. Explore these five ways for how to invest 10k in real estate now and be on your way to successful investing in no time.

6 Ways to Put $10K to Good Use in Real Estate

Check out these six investment opportunities and decide how to invest $10,000 in real estate to fit your goals and work with your lifestyle.

Real Estate Crowdfunding

In this type of investment, you do not need to be an accredited investor or be worth millions — a pool of regular investors like yourself can invest in large-scale properties through a mix of individual financial and intellectual resources. Adding your $10,000 investment to the picture can lead you into an investment scene that never would have been available to you otherwise.

Platforms to choose from include:

Fundrise

CrowdStreet

Streitwise

DiversyFund Inc.

Groundfloor

While the obvious pros to crowdfunding are investing in extensive deals with minimal money and potentially growing your net worth with passive income, the main cons are the same risks that come with any form of real estate investing. The market can turn, and the project just isn’t as successful as projected. Get the full rundown of the opportunity you’re looking to invest in, and weigh your options carefully.

Invest as a Partner

Deciding to invest as a partner can be extremely lucrative if you and your partner complement each other’s work ethic and ideas while also each bringing something different to the table.

If you can invest $10,000 in real estate, maybe your partner is matching your investment and you will split the responsibilities. Or, you are investing the cash, and they will be doing renovation work.

However it works out, make sure it’s someone you can rely on and trust; and make sure you consider the pros and cons before diving in.

Pros:

• Pool money and ideas for better investments.
• Split the workload — each partner can focus on what they are best at and take on their own responsibilities.
• Gain an impressive portfolio with more opportunities.

Cons:

• You do not have 100% control, but rather a partnership — splitting earnings equally (or whatever split you decide).
• Partners can become unreliable, not holding up their end of the deal or their workload.
• Partners’ financials can change, causing the whole deal to suffer and the partnership to struggle.

Real Estate Wholesaling

In the right market and with the right connections, real estate wholesaling can be done with very little money and become an easy way to make cash. You would essentially be the middleman, finding properties and finding end buyers while earning an assignment fee for yourself.

The steps are as follows:

1. Find a property. Usually, it’s a distressed, vacant, or neglected property with little hope to sell under normal circ*mstances.

1. Contact the owners. Many times these sellers are looking for a quick close and are highly motivated to sell their property. Make an offer for the property, identifying that you are a wholesaler, and take into consideration the state of the property and the market value.

1. Get into a contract with the sellers. Use a real estate attorney to add a clause into the contract that you can assign the contract to an end-buyer by a certain date or you can terminate the deal.

1. Find the end buyer. Assign the contract to the end buyer for more money than you agreed to pay the sellers.

1. Close on the property. The buyer and seller close, and you get your assignment fee. Wholesale properties can close in just a few weeks, as many are purchased with cash.

Example: The sellers are expecting $70,000 for their property per the contract. You, as the wholesaler, offer the property for $80,000 to the end buyer, who still sees that as a great deal and you walk away with $10,000 for bringing the deal together.

Wholesaling opportunities may not come around too often or be too prevalent in your area, but they are worth grabbing if they come up. There’s very little risk to you and little personal money involved.At the same time, you could be at the mercy of prevailing mortgage rates.

Down Payment on a Rental Property

Another way to invest $10,000 in real estate is to use it as a downpayment to purchase a rental property. While it may not be a hefty downpayment, it is still possible to purchase with as little as $10,000 down, depending on the type of loan you use and the price of the property.

Purchasing a rental property is a great way to generate cash flow and diversify your portfolio. A rental property is a more hands-on investment approach, where you manage and maintain the property and deal directly with your tenants.

It may take some time to see real income from a rental property, but as the loan gets paid down and the property (hopefully) appreciates, you can have equity in your investment property and a monthly stream of passive income.

The downside to purchasing a rental property is the unknown.

• Is this area going to deteriorate or flourish? Choosing the right neighborhood matters for appreciation and rental vacancy. Months without tenants means money coming out of your pocket to pay that mortgage and taxes.

• Is the home in good shape? If you need to put in a new septic system a few months down the line or replace all of the appliances, that can be a hard hit to your budget.

• Did you thoroughly vet your tenants? If they stop paying rent, damage the property or are a nightmare to deal with, tenants can be hard to evict.
• Were interest rates high when you bought the home. You may spend quite a lot of time waiting to refinance.

Transform Your Space into an Airbnb

An increasingly popular real estate investment is investing in an Airbnb property. This is a property you can rent out nightly, weekly, monthly or even for a whole season. Generally, Airbnbs charge more per night than a typical rental, so you could potentially make more money with an Airbnb than a regular rental property.

The secret really is the location. Airbnbs work best when they are in sought-after vacation spots close to water, activities, nightlife, or popular landmarks. Locations in major cities or near sporting events, colleges, concert venues, and fairgrounds can also be ideal.

Remember, too, that this real estate platform requires you to manage the property as you will have guests coming in and our all the time.

Spaces suitable for an Airbnb investment:

• A current rental property in a great location
• A second home or vacation home you already own
• A camper/RV
• A room in your home/in-law suite/pool house
• Luxury homes in popular vacation hotspots
• Homes you can subdivide in a popular real estate market

Investing in an Airbnb can cost very little if you already have the property. Fix it up for best results and purchase bedding, a coffee maker, fun themed decor, dishes, and silverware so visitors can have all the necessities and enjoy their stay. Newer, clean, well-maintained properties are most desirable and bring in the most visitors for the most money.

Before purchasing a property to rent out as an Airbnb, be sure you understand your state and city’s regulations as well as restrictions a homeowners’ association may have in place.

Investing in Real Estate in an IRA

Another way to invest $10,000 in real estate is to become a private lender through your IRA if you have one. Using funds from a self-directed IRA opens up the opportunity to lend money to individuals in real estate investing deals, without you needing to manage or own property outright. Some of the rules associated with an IRA investment include:

• You cannot loan money to family members or spouses for any investment purposes
• Interest and loan repayments must be put back into you IRA account
• Assets used to secure the loan may not be collectible property

With an IRA investment strategy, you are essentially using money that you already have saved to invest and make a return. This means that you can technically invest in any asset class, but you can’t buy your dream home in the Hamptons. You can, however, get into a rental home or offer hard money loans to investors who are working on your behalf.

Through the private terms with the borrower, you are in control of your investment. While there are rules and restrictions, this can be a great way to increase your retirement account in a passive and tax-free or tax-deferred manner.

Equity Trust IRA

IRA Financial Group

uDirect IRA

Rocket Dollar

When you work with these platforms, you will gain market insights, build your real estate portfolio, even invest in a tax lien and access the housing market in your own time. You don’t need to be a property managers, and you aren’t pitching to home buyers, but you have a real estate asset in your grasp nonetheless.

The Bottom Line on Investing in Real Estate with $10K

Investing in real estate isn’t just for the rich, the entitled or the lucky ones with all the connections. With this knowledge of how to invest 10k in real estate, you can start making your own connections and building your own real estate investing opportunities right now. From a real estate investment trust to connecting with a real estate agent in major markets like New Jersey, Kansas City, Washington DC, New York, Los Angeles or San Francisco, there’s a real estate platform designed just for you.

Take one of these options, or take them all. They are all available to you if you have $10,000 to invest in real estate. Simply remember that the difference in managing those funds between, for example, an equity REIT and house hacking is going to vary widely.

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