A lot of people want to invest in real estate and own a rental property to make extra passive income and increase their net worth. A question that many beginner real estate investors ask is how to get into real estate investing with only $10k in your pocket. Getting started in real estate is not easy especially if you have little or no funds at all, but it is not impossible. There are several creative real estate investing options that will show you how to get into real estate investing with only $10k.
How to get into real estate investing with $10k: Buy a rental property
Investing in a rental property is the most common way to make money in real estate. However, with only $10k, your options are a bit limited since mortgage lenders often ask for at least 20% down payment. In this case, you have 3 options:
1- Find an investment property for less than $100k
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
2- Find a lender that requires less than 20% down payment. (Check out hard money option below)
3- Consider buying foreclosed properties
How to get into real estate investing with $10k: Wholesaling
Real estate wholesaling is one of the most popular alternative real estate investing methods. What makes this investment strategy attractive is that not much money is required to do it. Real estate wholesaling is all about finding properties at a discounted price, putting them under contract, then selling the contract to a potential buyer for a higher price. The difference is yours to take!
The costs associated with property wholesaling are small, but still, they are there. There are educational costs, operational costs and most importantly, cost of the time you invest in finding buyers. That being said, real estate wholesaling might seem like an easy strategy to make money in real estate. IT IS NOT. The process requires a lot of networking and exceptional negotiating skills.
How to get into real estate investing with $10k: Fix and flip
So you have $10k laying around and you want to get in the real estate business. Considering a fix and flip strategy might be a good option for you. All you have to do is find a distressed property, rehabilitate it, then sell it for a higher price to make profit. How can you do all that with just $10k? To finance a fix and flip project, you can look for a partner who is willing to share risks and profits. Otherwise, a hard money loan is your best financing option.
Like real estate wholesaling, fix and flip is a short term real estate investment strategy. With the $10k, your aim is to find a property and use that money to renovate it. The more time you hold the investment property, the riskier the investment gets since you have to keep paying mortgage payments.
How to get into real estate investing with $10k: Partner up
If you ask me how to get into real estate investing with little or no money, I would definitely tell you to form a real estate partnership. Investing in real estate together with other people offers many advantages like sharing risk and financial commitments. Finding a partner from your circle of friends, family or even colleagues can be achieved if you have a sound investment idea. With the $10k you are willing to invest, you can offer to pay it as a contribution to the investment capital or find a partner willing to give you the money in exchange for your time and experience. Remember to agree beforehand with your partners on the role of each partner by signing a partnership contract to avoid future disputes between investors.
How to get into real estate investing with $10k: Private/Hard money
A private or hard money loan is a short term loan that is secured by a real estate property and can be used to finance risky real estate investments like fix and flip projects. Traditional lenders are not comfortable lending risky investments with a small likelihood of success. For that, hard money loans offer financing opportunities for real estate investors with less stringent qualifications. However, hard money loans come with high interests rates and fees.
How to get into real estate investing with $10k: REITs
REITs, short for Real Estate Investment Trusts are companies that own and operate income producing real estate of all types. Investing in REITs is exactly like investing in other securities on the stock market. Therefore, it is an indirect way to invest in real estate, which means you don’t own any physical investment property but only shares in the company. What makes REITs an attractive alternative to traditional direct real estate ownership is the high dividend that must be distributed to shareholders in order to qualify as a REIT. Real estate companies opt for this status to avoid paying taxes at the corporate level.
The Bottom Line
The real estate investment strategies mentioned above show you how to get into real estate investing with as little as $10k in your pocket. Each investment strategy has its pros and cons. Make a list of strategies and their corresponding pros and cons and choose the method that suits your investing preferences. One last piece of advice, getting started in real estate investing can be tough without the right tools and education. For everything you need to know about real estate investing, follow Mashvisor’s blog section. Moreover, if you ever decide to start investing in real estate, Mashvisor is your best buddy. With our property finder and rental property calculator, we guarantee that you will find the best real estate investment opportunities in no time.
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