Wondering what the best way to invest $10,000 is? An investor has a lot of different options, but there is only one that can be labeled as “the best way to invest $10,000”: a real estate investment.
When most people are looking for ways to invest smaller sums of money like $10,000, a real estate investment is the last to cross their mind. While it’s true you don’t have many options of actually buying investment property with $10,000, there are plenty of other real estate investing opportunities out there that allow for a low cash investment.
Why Is Real Estate the Best Way to Invest $10,000?
A real estate investment is the best way to invest money. Period. Whether it’s $10,000 or $100,000, direct real estate investing or passive real estate investing, there are so many benefits to becoming a real estate investor. Here are three reasons that make real estate the best way to invest $10,000:
Stability Makes Real Estate the Best Way to Invest $10,000
As a small-time investor, you need something that provides a good return on investment with very little risk. While there is some risk to traditional real estate investing, it is simply not as risky as other types of cash investment. Take a look at the real estate market. Sure, it’s had its ups and downs, but in general, the real estate market is not volatile.
When learning how to invest $10,000 in real estate, you’ll find out that most ways don’t revolve around traditional, direct real estate investing. Instead, you become a passive investor, relying on professionals in the real estate investing business to do the work for you. This makes a real estate investment even more stable and reliable, with limited risk.
Cash Flow Makes Real Estate the Best Way to Invest $10,000
Another reason why a real estate investment is the best way to invest money is the cash flow. With many other types of cash investment, there simply is no cash flow. Take stocks or shares, for instance. While this form of cash investment accumulates value, it’s a one-time deal: sell and make a profit.
With real estate investing, the cash flow can come monthly or quarterly depending on the type of real estate investment. This means a steady cash flow income when becoming a real estate investor. Typically, as a passive investor, all of this cash flow goes into your pocket. When a real estate investor chooses to sell, real estate appreciation will have accumulated value for the investment property and a return on investment will come in that form as well.
Passive Income Makes Real Estate the Best Way to Invest $10,000
Becoming a real estate investor with $10,000 usually means becoming a passive investor. Besides finding the real estate investment, there is no work done, and yet the cash flow will roll in. Not many other forms of a cash investment can bring you passive income in this way.
Related: What Are the Best Passive Income Investments in Real Estate?
How to Invest $10,000 in Real Estate Investment Properties
There are a few ways of how to invest $10,000 in real estate investment properties. Three ways are direct real estate investing where becoming a real estate investor can mean becoming a landlord. If you prefer being a passive investor, there are two ways to do this to make passive income.
Direct Real Estate Investing with $10,000
Airbnb Investment Property
Want to try your hand at owning an Airbnb investment property but only have the $10,000? Why not try converting your current residential real estate property into an Airbnb investment property? Many real estate investors have found success with renting a room on Airbnb rather than an entire Airbnb investment property.
Before becoming a real estate investor in this way, you’ll have to ask yourself a few questions:
- Do I live in an area where the demand is high for an Airbnb investment property?
- Does the local real estate market promise a good return on investment for an Airbnb investment property?
- Am I okay with living in the same house while renting a room on Airbnb?
Finding the answer to the first two questions is crucial in order to ensure that renting a room on Airbnb is the best way to invest $10,000. The easiest way to do this is by using an Airbnb profit calculator. An Airbnb profit calculator will show you the best locations in the real estate market for renting a room on Airbnb.
You can enter your location, and the Airbnb profit calculator will show you the expected Airbnb rental income, cash on cash return, cap rate, and Airbnb occupancy rate for your area. This will help you decide if renting a room on Airbnb in your local real estate market will bring a good return on investment or not.
Try Mashvisor’s Airbnb profit calculator. To start your 14-day free trial with Mashvisor and subscribe to our services with a 20% discount after, click here.
Once you have determined if your local real estate market is a good location with an Airbnb profit calculator, ask yourself if becoming a landlord, specifically a live-in landlord, is right for you. If you like the idea of meeting new people while making great cash flow, then an Airbnb investment property is likely right up your alley.
The $10,000 will be more than enough to prep for renting a room on Airbnb and any common areas or added amenities that you will need to provide as an Airbnb host. Don’t forget to check your location for Airbnb laws and regulations.
Can’t make up your mind? Read: Does It Make Sense to Rent Out Airbnb Rooms?
Owner-Occupied Duplex House
Buying investment property with $10,000 may be possible with an owner-occupied duplex house. This is because these kinds of investment properties qualify for an FHA loan with a 3.5% down payment. If you can find a less expensive duplex house in the real estate market that will only need a $10,000 down payment (or less) with an FHA loan, you could very well be on your way to becoming a real estate investor and owning investment property with $10,000.
Quickly find a duplex house in your price range using Mashvisor’s heatmap. To start looking for and analyzing a duplex house in your city and neighborhood of choice, click here.
Real Estate Partnership
A real estate partnership can be the best way to invest $10,000 if you’re willing to take the reins on the investment property. Typically, a real estate partnership can be a good way for making passive income if you are investing the majority of the money and allowing someone else to do the rest. However, if you are the one putting up a smaller sum like $10,000, be ready to take care of finding and possibly even managing the investment property in this form of real estate partnership. You’ll be leveraging someone else’s money to make a better return on investment with a real estate partnership. Because of this, it’s a great way to get into real estate investing if you can find a reliable and trustworthy real estate partner.
Passive Real Estate Investing with $10,000
REITs (Real Estate Investment Trusts)
Why is REIT investing on the list for the best way to invest $10,000? Two words: inexpensive and easy. Not only will you be able to make passive income with REIT investing, but it’s an easy way to get into real estate investing. A real estate investor can find REITs for as low as $500, meaning you can invest in multiple REITs with $10,000 and spread the risk.
Learn More: What Is a Real Estate Investment Trust (REIT)?
Real Estate Crowdfunding
The primary goal of real estate crowdfunding is to allow all real estate investors, no matter how much capital they have, to invest. Some real estate crowdfunding sites allow you to invest as little as $500. With a trusted real estate crowdfunding platform, becoming a real estate investor will be easy and low-risk, and you’ll be making passive income.
Don’t buy into the idea that you need a lot of money to get into real estate investing! Not only is a real estate investment the best way to invest $10,000, but as you can see, there are a variety of ways to do so. Find the one that best suits your investing goals and start your journey to making money with real estate now.