What would you do if you won 10000 dollars today? Some people would go on a cruise to the Caribbean. Some would buy their mother a car. Others would pay off their student loan debt. Well, if you invest that 10k in real estate, you could end up with enough money to do all of these things and much more!
Investing in real estate is undoubtedly one of the best ways to make money. No matter how much money you have, even if it’s nothing, there is always a way to get involved in real estate investing.
Related: 9 Ways to Invest in Real Estate with Little or No Money
But what if you didn’t have nothing, what if you had $10,000 to invest? What’s the best way to invest 10000 dollars in real estate? That would depend on your situation, goals, and experience. Whatever the case may be, here are the best ways to invest 10k in real estate.
1.) Renting Part of Your House
Some say the best way to invest 10000 dollars is to immediately buy a rental property. While purchasing rental properties is never a bad investment, there are different ways to tackle the real estate investment business. For instance, you could decide to rent out a part of your current home. You may opt to rent out a room, a garage, or a separate part of the house. This is a stable way to invest in real estate with a budget of $10,000. If you have a full-time job aside from real estate, this can be a great secondary source of income. Also, you’re still in for tax benefits as you would in the case of a rental property.
2.) REITs
If renting out a part of your home isn’t your best way to invest 10000 dollars, consider investing in REITs. REITs, or Real Estate Investment Trusts, are another form of lucrative passive investments in real estate. In essence, REITs are companies that own income properties and have individual investors pitch in on the investment. Common investments with REITs include malls, skyscrapers, and other forms of commercial real estate.
The benefits of REITs are plentiful. For starters, returns on REITs are often high. All participating investors receive their fair share of profit. As an asset, REITs have excellent liquidity, even more than that of a rental property. And finally, its tax rules are not complicated, albeit tax rates may be high.
3.) Tax Liens
Here’s another best way to invest 10000 in real estate: invest in property tax liens. A property tax lien is a lien held on a property when its owner fails to pay its taxes for a few years. What an investor can then do is purchase the lien certificate and make a lucrative return. How this works is that the lien certificate is auctioned, and the winner buyer purchases the lien certificate. Then, the investor notifies the owner, and the owner must repay the investor. The repayment also includes an interest rate, which can range from 5% to 35% depending on the state. A premium can also be charged if the certificate was purchased with a premium. If the owner fails to pay, the investor can foreclose the property, but this doesn’t happen often.
Investing in tax lien can be the best way to invest 10000 for experienced real estate investors. Nascent investors might struggle, as they are not familiar with the rental housing market. You also need to be very aware of the property itself before considering buying off its tax liens.
4.) Real Estate Crowdfunding
If you’ve been on the Internet as a real estate investor, you’ve probably heard that real estate crowdfunding is the best way to invest 10000 dollars. In real estate crowdfunding, investors communicate through social media on pitching in on investment opportunities. Think of it as a way of online real estate partnerships.
This type of investment is both active and passive in a sense. It’s passive in the amount of money you can invest in (a 10k budget is just fine). However, it is active in the sense that investors themselves, not a company, choose the property they wish to invest in. Also, investors can directly contact real estate developers. The downside to crowdfunding is that it is risky. If the market worsens, so will your income properties.
5.) Lease to Own
Next up on the best way to invest 10000 dollars is to consider a lease to own option. Both a renter and a seller can be impacted by a lease to own, but we will focus on the view of a renter, as the renter is the one entering real estate through a lease to own.
In a lease to own, a renter has an option to rent and eventually purchase the rental or just rent the property. The decision must be made before a certain point in time agreed upon by the renter and the owner. This option is a great way for renters to enter real estate investing if they cannot get qualified for a mortgage. The con, though, is that they will have to pay extra per month in rent to eventually purchase the property.
Related: Lease to Own Option and its Pros and Cons for Buyers and Sellers
6.) Wholesaling
If you’re not into buying investment properties, wholesale real estate may be your best way to invest 10000 dollars. While you do not purchase a property with wholesaling, you purchase the contract of a property on sale. Then, you sell that contract to a buyer for a higher price. Essentially, you act as the middleman between the seller and the buyer.
What makes wholesaling so effective is that it is quick and requires little money. However, it definitely isn’t the easiest of investments. That’s why more experienced real estate investors are usually the ones performing wholesaling, not beginners. Still, it is absolutely possible to make great money with wholesaling, especially if you have the right network.
So, which was the best way to invest 10000 dollars in real estate? Your answer will probably be different from others depending on your goals. Whatever the best way to invest 10000 dollars in your eyes is, be sure to commit, have fun, and make some money!
To start your property search, head over to Mashvisor.