Investing 100,000 in real estate can be a great way to diversify your portfolio and generate passive income. With proper research and planning, that 100k can be leveraged into acquiring rental properties, REITs, real estate crowdfunding, and other avenues. However, real estate investing does come with its risks and challenges. You’ll need to factor in expenses like property taxes, insurance, maintenance, as well as vacancies and turnover costs. Here’s an overview of smart options to invest 100k in real estate.
Invest in a rental property
The most direct way to invest 100k in real estate is to purchase a rental property. Depending on the market, 100k can serve as a down payment on a small multi-family home, condo, or single-family home that you can rent out. Be sure to factor in expenses like mortgage payments, property taxes, insurance, maintenance and repairs. Hiring a property manager can help reduce headaches. Rental income can provide monthly cash flow, and the property can appreciate over time to build equity and wealth.
Invest in a real estate investment trust (REIT)
REITs are companies that own and manage income-generating real estate. With 100k, you can purchase shares of publicly traded REITs that invest in apartments, office spaces, hotels, warehouses, and more. REITs provide the benefits of real estate investing like dividends and diversification with the liquidity of stocks. A REIT ETF can provide instant diversification across the real estate sector.
Invest through real estate crowdfunding
Real estate crowdfunding platforms allow you to invest in individual property deals or an investment fund with other investors. Most deals require a minimum investment of $5,000-$10,000. By spreading your 100k across multiple deals on a site like Fundrise, you can gain exposure to different markets and property types with less capital per deal.
Purchase vacant land
With 100k, you may be able to outright purchase a plot of vacant land. Raw land can be held as an investment for price appreciation or future development. Be sure to evaluate factors like location, zoning regulations, development potential, and market conditions when selecting a parcel.
With thorough research and realistic expectations, 100,000 can serve as a solid starting point for investing in real estate. Maintaining a long-term perspective and utilizing a mix of options like rental properties, REITs, and real estate crowdfunding can help mitigate risks.