One of the great things about real estate investing is its relatively low barrier to entry. Unlike other types of ventures, you don’t necessarily need a large initial capital to get started. Moreover, scaling your investment and acquiring multiple assets is facilitated by a wide range of investment property financing methods. So let’s assume that, like many people, you have managed to save around 30k. How can you put this money to work for you? And what is the best way to invest 30k in real estate? In this article, we will show you how to invest 30K in real estate and outline a few strategies that can help you generate a good return on investment.
How to Invest 30k in Real Estate: The 7 Most Effective Ways
There are several ways to invest in real estate. In fact, the market offers you a myriad of options that include everything from investing in physical assets to acquiring shares in real estate trusts. Below is a detailed look at how to invest 30k in real estate in the most efficient ways.
1- Use the money as a down payment for rental property
One of the best ways to invest 30k wisely is to use the money as a down payment. For most conventional loans, this is generally 20% of the overall value of the income property. Depending on where you choose to invest, you might even be able to invest in two rental properties. Cheap real estate is widely available in secondary markets and getting these investment properties to the point where they are able to generate positive cash flow is a relatively simple process.
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2- Explore real estate partnerships
Real estate partnerships are another great option that many investors rarely consider. Working with one or multiple partners will enable you to take on large investments and scale your business in a fast manner. In fact, establishing partnerships is the easiest way to get into high cash flow investments such as multi family homes. These investment properties generate very high rental income and are the best way to invest money if you are looking to grow your portfolio in an aggressive way.
3- Invest in the construction side of the business
Buying investment properties should not be your sole focus when you’re trying to decide how to invest 30k in real estate. In fact, the construction side of the real estate business can be just as profitable. With all indicators pointing to a substantial increase in construction in 2020, this might be the ideal time to invest in some large home builders.
4- Consider REIT investing
This is one of the real estate investment strategies that has gained a lot of traction in recent years. So what is REIT investing and how to invest 30k in real estate with this strategy? In simple terms, REITs are entities that invest, finance, own, and operate income properties. When investing in a REIT, the real estate investor acquires stock in the entity rather than an ownership stake in the investment property itself. For people who are unsure of what to do with 30k in savings, this strategy can be a convenient way to get into the housing market without going through the hassle of real estate market research and investment property analysis.
5- Real estate crowdfunding
The emergence of several online platforms has popularized the concept of real estate crowdfunding. The idea is very straightforward; multiple investors pool their money together to fund a particular real estate project. This is another great way to invest 30,000 dollars if you are looking to generate passive income with little to no effort. Moreover, the 30k can be allocated to different ventures since most projects tend to have very low minimum investment requirements. Examples of platforms to consider include Fundrise, Realty Mogul, and Patch of Land.
6- Invest in real estate notes
When you’re trying to figure out how to invest 30k in real estate, investment notes should be seriously considered. Much like the two previous methods, investing in real estate notes saves you the hassle of managing physical income-generating assets. There are several types of notes that you could invest in, some are issued by financial institutions whereas others are offered by real estate investors. But before you invest $30,000, it is essential that you do your due diligence. Beginners are better off sticking to real estate notes that are issued by established banks.
7- Invest in real estate mutual funds
A mutual fund is a vehicle that allows you to generate a profit from a wide range of investments. They are generally less risky than stocks and other types of speculative assets and they tend to draw conservative investors. Funds that focus on real estate investing should be of particular interest to you. As a matter of fact, some mutual funds offer very low fees as well as diverse real estate investments to their clients.
The Bottom Line
So what is the best way to invest 30k in real estate? The answer depends entirely on how you want to manage your investment. If you prefer a hands-on approach, then using your money as a down payment and purchasing income properties is the way to go. Conversely, if you are looking to generate passive income without having to manage a physical asset or work with a property manager, you should consider investing in a real estate focused business entity.