We all know that real estate is a tough market to crack, especially if you lack the funds to do so. But how to invest $10k in real estate?
$10,000 is a lot of money in everyday life, but when it comes to real estate investments, it might not seem like much. However, you might be surprised at what you can do when you invest $10k in real estate.
With this in mind, we are going to be looking at five ways to invest $10k in real estate in a way that will create the most lucrative possibilities for you in the real estate market whilst also beginning your career in the industry! Let’s get started.
- 1. Wholesaling In Real Estate
- 2. Rental Property Down Payment
- 3. Find A Partner Or Invest As A Real Estate Partner
- 4. Utilizing Your Own Property
- 5. Real Estate Crowdfunding
- How To Invest $10K In Real Estate – Frequently Asked Questions
- Final Thoughts
1. Wholesaling In Real Estate
Wholesaling in real estate is different from what you will find with wholesaling in banking investments. There are three particular steps to real estate wholesaling:
- The wholesaler will establish a contract with a seller in order to find a buyer for their particular property
- The wholesaler will then find a buyer and will offer a higher price than was agreed by the seller.
- The wholesaler will keep the profit difference if the deal is closed.
Wholesaling can be an attractive model- although it is a tricky one to do right- as you don’t always need your own capital to be a real estate wholesaler.
That being said, you will still need some money to get into the wholesaling real estate market, which is where an investment of $10k can come in incredibly handy.
You do need to have a firm grasp on your plan before you get into wholesaling, though, so make sure that you have a network of solid and reliable investors that you can reach out to in order to avoid any shoddy deals.
You will also need to ensure that there will be space for profit when wholesaling, particularly if you find yourself dealing with fellow real estate investors who are trying to sell high and buy low.
Keep your wits about you and make sure that you have all of the relevant information, knowledge, and connections, and you should be able to start marking your mark in real estate investment via wholesaling.
2. Rental Property Down Payment
Buying a home for $10k is not likely, but it is definitely enough to use a down payment on a rental property that is on the cheaper end of the scale.
By putting a down payment on the property, you can then begin to fix up the property and find the right tenants that are able to cover the taxes and the mortgage.
This might be a long term strategy, but it is one that is also relatively low risk and is very likely to see you get your $10k investment returned. You can even make a profit on that investment too!
Another benefit of investing in a rental property is that it can be a good way to hedge against inflation, as long as you finance the investment with a mortgage that is on a fixed rate.
By doing this, your monthly interest payments shouldn’t change over the life of the loan.
You can increase your cash flow over time, though, as you can raise the rent in order to keep pace with the inflation.
3. Find A Partner Or Invest As A Real Estate Partner
Finding partners for real estate investment- or reaching out to other investors to potentially become involved in their investments- is a great way to pool together finances and make your buying power much greater.
At the end of the day, $10k is useful if you use it wisely for real estate investment, but on its own, it is pretty limiting. Joining up with others gives you the opportunity to pool resources with others whilst lowering the individual financial risk.
If you are unsure of where to start when it comes to finding the right real estate partners, consider becoming an active part of the real estate investment community online.
This is a great way to start building relationships and making connections, furthering the chance of you finding the right investment partner.
4. Utilizing Your Own Property
If you have the space in your own property for one or more people to inhabit- such as a basement, spare rooms or even space in the attic- then you can always consider using that $10,000 on your home so that you can earn rental income.
When it comes to how to exactly use those funds, you can put it into improving or finishing rooms or possibly even expanding certain areas of your property to accommodate for possible tenants.
By improving these spaces in your property, you can transform them into a living area that renters will want to pay to live in.
As well as possibly renting out your property, you could also use the money to turn it into an Airbnb. By doing this, you can also begin to earn some passive income, much like you can with renters.
If you ever choose to sell your home, the investments that you will have made into it will also increase the value, which is a nice bonus incentive!
5. Real Estate Crowdfunding
Crowdfunding is a relatively modern premise, with various small businesses and startups able to establish themselves in a way that might once have seemed impossible.
The same goes for real estate investing, with crowdfunding opening up doors to those with little or no money to get into the industry.
When it comes to having $10k to put into your real estate business, you can invest in other real estate investors via crowdfunding (as well as utilize the strategy yourself if you so choose).
Do your research by looking through all of the various real estate investment opportunities to be found via crowdfunding and take your pick. You can even consider investing in multiple projects at once with your $10k.
Another great way to invest that money with real estate crowdfunding is to sell your shares off to other investors, or liquidate your shares once the property has sold.
How To Invest $10K In Real Estate – Frequently Asked Questions
What Is The Best Way To Structure A Real Estate Investment Business?
There are a few different ways that you can structure a real estate investment company, with the most common being forming an LLC, also known as a limited liability company.
This is due to the universal use of LLCs in real estate thanks to being a separate, distinctive legal entity.
There are other ways to go about this though, such as via a Sole Proprietorship or an S Corp.
Do I Need A Real Estate License To Be An Investor?
Whilst it isn’t entirely necessary to have a license, some consider it a beneficial way to increase your real estate business.
There are pros and cons to both sides of this question, such as the possibilities that open up for you with a license as a pro and the costs of obtaining that license as a con.
Research the topic thoroughly to see if there is enough potential for gains if you were to obtain a license.
Are There Tax Benefits To Gain from Real Estate Investment?
There are various benefits that you can receive in terms of tax when it comes to real estate investing, with the easier being when you become a rental property owner.
However, this isn’t the only way you can receive benefits, as when you rent a property that is a range of expenses that you can receive such as repairs, depreciation, and interest to name a few.
So there you have five of the best ways to start making a mark in the real estate investing market with $10,000.
If any of these ideas interest you, make sure to do your research thoroughly so that you have all the information that you need before you start making important decisions.
You should then be well on your way to seeing a return on your investment whilst also building a lucrative real estate investment career for yourself!
Paul Martinez is the founder of BendingDestiny.com. He is an expert in the areas of finance, real estate, and eCommerce.
Join him on BendingDestiny.com to learn how to improve your financial life and excel in these areas. Before starting this blog, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.