How to Invest in Real Estate with 10k

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How much do I need to invest in Real Estate? Well, if you thought it was too expensive for you, I’ll teach you just how to invest in real estate with 10k or less.

Real estate investments play an integral role in the US economy. According to the US Bureau of Economic Analysis, National income and product accounts, spending on housing services was 11.6%, and combined with 3.3% of residential fixed investment, the housing market’s overall expenditure accounted for almost 15% of GDP.

Real estate investments can either be active, passive, online, or direct. This piece will cover how to create wealth investing in real estate, the best places to invest in real estate, and the different ways of how to invest in real estate with 10k or even less. Many people have done it, I have done it, and you also can!

How to Start Investing in Real Estate with 10k

real estate income

So, how do you get started with real estate investing with little cash? Let’s dig in:

1. How to Invest in Real Estate with 10k Online

The lazy way to invest in real estate is to go online. With online real estate ventures, you don’t have to step out of your door. All you need is a smartphone or a PC and a reliable internet connection.

Some of the best online real estate investments include real estate crowdfunding, REITs, and real estate syndication.

a) Real Estate Crowdfunding

If you desire to go passive, consider real estate crowdfunding. Online Real estate crowdfunding or co-ownership is a very recent method of investing in property.  The JOBS act in 2012 paved the way for real estate crowdfunding. 

Real estate crowdfunding involves pooling money together with many other investors. It lets you access the housing market with very little investment, even less than 10k. You can invest even as low as $1k or $5k. 

Investors raise money for their ventures through crowdfunding platforms.  As an investor, you can choose a real-estate crowdfunding platform and pick the main project to invest in.  

Alternatively, you can diversify where you invest in multiple projects at a go with your $10k. You can make money by selling your share to other investors or waiting to make money when the property sells.

So, what are your options in crowdfunding or co-ownership? Here are some of my favorite platforms:

Want to invest in commercial buildings? Here is how to invest in commercial real estate- join RealtyMogul.

With this platform, you’ve got yourself an incredible solution on how to invest in real estate with 10k and below. In fact, you can invest with just $1k.

RealtyMogul is a real estate crowdfunding platform that offers its investors a chance to invest in a wide range of commercial properties. It is only open to accredited investors but with some limitations, as non-accredited investors can invest in its REITs.

RealtyMogul charges 1% fees for administration and asset management. You may also pay a one-time fee with specific investments and 0.50% to 0.60% on average as REIT fees.

The platform’s main disadvantages are that the investments are highly illiquid and their fees are variable. You must,  therefore, read the fine print to know their exact cost at that time.

Taking an interest in investing in real estate is an excellent idea to earn. Finding investment-related jobs is also a great way to get an extra income too.

This is another online real estate crowdfunding investment platform with a mix of residential and commercial real estate. Fundrise offers US residents the power to invest in local real estate.

The minimum Fundrise investment is $1000. Fundrise is open to any interested investor regardless of their net worth -a feature that is quite attractive to many people. 

The platform charges 1% management fees, and several other fees may apply.  You can get an advisory fee waiver for 12 months. 

Some of its advantages are that it offers consistent cash-flow, long-term gain potential, and diversification.

With Fundrise, you can create an account, choose a portfolio strategy, and your cash will be diversified across investment fund series, customized to fit your chosen strategy. Fundrise investment options can either be active or passive.

See related: Fundrise vs RealtyMogul: What Site is Best?

  • Groundfloor

GroundFloor is a real estate crowdfunding platform that caters to residential property loans. It offers property flippers and real estate investors a short-term loan to purchase a distressed property, do rehabilitation, and either resell it for profit or refinance it as a rental.

After closing a deal, the borrower repays GroundFloor, which pays investors the principal amount plus interest. The money reflects in the account four to five days after the loan closes and is ready for withdrawal for other projects.

You only need a $10 minimum to invest with GroundFloor. And since the borrowers pay all the fees, there are no investor fees charged.

The main drawbacks of GroundFloor include a high default rate, investors get updates after 30 long days, and there are no equity investment options.

GroundFloor real estate crowdfunding platform offers a marketplace for both accredited and non-accredited investors. Investors can build a diversified portfolio of loans and choose the risk they are comfortable taking.

b) Real Estate Investment Trusts (REITs)

With as little as $10k, you can invest in REITs. REITs are stock investments, and all you need to do is purchase the stocks.  This investment has offered regular people a credible way to make passive income from real estate investments.

But, you need to choose the one that best suits you from multiple types of REITs, including Equity REITs, Mortgage REITs, and Hybrid REITs. You can either invest in commercial or residential real estate.

Platforms that can help you invest in REITs include:

  • M1 Finance

M1 Finance lets investors do automatic investing with a high-level of customization. That means investors can tailor their investments to their exact specifications.

With this free platform, you can create a portfolio that contains individual stocks, use a low-cost ETF- or both. With M1 Finance, you can choose from over 80 expert portfolios or build your own from scratch. The platform maintains pie allocations using fractional shares. 

M1 Finance is best suited for buy and hold investors seeking passive income. 

The good thing is, it does not charge trading, management fees, or fees for deposits and withdrawals to the bank you connect with. And, you don’t even need any minimum initial deposit. 

After joining M1 finance, you can start investing with as little as $10 in your account. If you‘re young and looking for real estate investments, this is the perfect answer to how to invest in real estate young.

The downsides of M1 finance are that it doesn’t accept outside holdings, not suitable for active traders, no tax-loss harvesting, and you can’t buy mutual funds.

When you’re considering investing, you need a guide like M1 finance and other related investment guides to create a great investment portfolio and secure you’ll earn.

  • YieldStreet

real estate wholesaling

YieldStreet is a high-risk investment that was only available to accredited investors with high net-worth until recently. In August 2020, YieldStreet opened its doors to most US investors with $10,000 as a minimum investment amount. And, the Prism Fund account minimum amount is as low as $5000.

It offers a way to invest in alternative investments from real estate, art to legal settlements. That makes it riskier than other investment accounts. 

Their management fee falls between 1% and 2.5% per year, and additional fees may apply, such as a flat annual fee and a listing fee.

However, Investors receive interest payouts regularly over the life of the loan. The investments fit investors who don’t need their cashback for years as they are highly illiquid.

  • StreitWise

Streitwise is an online platform that allows you to earn passive income from commercial real estate investments.  They offer professionally managed real estate investments open to both accredited and non-accredited investors. 

With Streitwise, you can get started with as little as $1000 and increase the amount with chunks of $500, that is, pick $1500, $2000,$2500, and so on. With Streitwise, you can automatically reinvest your dividends.

Streitwise charges 2% annual management fees and 3% upfront investment fee.  An investor can open multiple accounts from an individual retirement account (IRA), an individual taxable account, to even a Trust.

  • CrowdStreet

Founded in 2014, the CrowdStreet platform helps one venture into commercial real investing. It caters to long-term investors and is only open to accredited investors looking to diversify their portfolios.

CrowdStreet connects with project sponsors at a small fee. Also, it charges a management fee of 0.5% to 1%. It provides the largest number of investment offerings in the market at any given time.

CrowdStreet is exclusive to high net-worth individuals, and its minimum investment is $25k, which is relatively high and is more than most investment accounts. If you can get more than 10k, then you can give it a try.

  • Diversify Fund

This platform offers non-accredited investors a chance to diversify their portfolios in real estate investing. With as low as $500, you can get started.

However, don’t expect to get any returns as soon as you invest in Diversify Fund. Your returns will begin to come after 3 to 5 years.

DiversifyFund charges no management fees. It offers investors access to commercial real estate deals. It owns as well as runs all its investment properties.

Some of its main bottlenecks include the investments are highly illiquid, and it offers limited investment choices.

c) Real Estate Syndication

This is another online venture and a form of property investment partnership or company.  Different real estate investors pool funds, skills, capital, and other resources for a common goal.

This investment form focuses on large-scale real estate properties that a regular investor would otherwise not afford on their own. In property syndication, there is usually a syndicator and an investor. The syndicator, also known as sponsor, scouts, and manages the property put under a contract.

As a syndicator, you acquire funds from other investors for buying, renovating, and operating the property. Those investors expect a monthly, quarterly, or annual return, which the syndicator provides. Once the property is sold, the profits are split as agreed.

Now in this type of investment, you can act as an investor and invest the $10k. Your only role is to offer the minimum amount that the syndicator will ask for. So, look for real estate syndication deals that ask for 10k or less from the investors.

Investing is one of the best passive incomes to continue generating income without earning a lot of work. To invest, you don’t need to start with a big capital; you can start small and make it grow in the long run.

2. How to Invest in Real Estate with 10k: Real Estate Wholesaling

real estate wholesaling

Real estate wholesaling is a process through which you find a discounted property, get it under a contract and sell it for a profit. The wholesaler acts as a middleman, acquires a contract from the property seller, and assigns the same contract to a buyer.  Their primary role is to market the home and to find a suitable buyer.

Can you do wholesaling with as little as $10k? Yes! You only need to have a little bit of cash to do this venture. 

You can begin to assign contracts without money. In fact, you only need to get an assignee for a particular property, and you’ll be halfway done.

 However, your success depends on getting hold of people, generating leads, and making offers – and that’s where your expenses come in. You need cash to market the property, and your $10k will help you with that.

The money you earn as a wholesaler is the difference between what the buyer pays and the home price.  But you must sell the home before your contract with the homeowner close.

To get into real estate wholesaling, you need to have a network of investors. Also, ensure there’s enough room to make profits and stick to the time limits to ensure you get what you’re working so hard for.

See related: 10 Best Fundrise Alternatives for Real Estate Investing

3. How to Invest in Real Estate with 10k as a Partner

Going it alone with just 10k sometimes offers limited options. But, if you join efforts with several investors with similar interests, your buying power grows exponentially.

Pooling funds together helps lower the risk of buying real estate properties alone. A real estate partnership is the easiest way to purchase an investment with little cash.

But before you scout around for real estate investment partners, create a business plan. It would be easier to convince investors when they know what you plan to do, how, and the goals.

Scan around for real estate properties available, and calculate the amount of money you need as a down payment. Then do a real estate market analysis along with investment property analysis. This helps you calculate the rate of ROI and cash flow to ensure the investment will be profitable.

Once done, then it’s time to get the partners. But how do you get the right partners?  Well, you have several options to help you get suitable business partners.

First, look around your circle of friends, family, and colleagues. Next, consider online real estate platforms and communities.  Read through their comments to find out if there people looking for investment opportunities.

The partners you pick should have one important trait – trustworthiness.  Also, it’s good to look into their personality, diversity, and objectives.

Once you find a good team, create a partnership agreement with complete details about the partners, contributions, roles, profit, and loss contributions.

After getting reliable partners to invest with, how much you need to invest in real estate will no longer be an obstacle in your journey towards owning a property. 

And, now you have it! You now know how to invest in real estate with 10k, even without breaking much sweat.

 

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