With $100,000 to invest, real estate can be a great way to diversify your portfolio and generate passive income. The key is determining the right investment strategy based on your goals, time commitment, and risk tolerance. This article will explore options like rental properties, REITs, real estate crowdfunding, and house flipping.
Evaluating Potential Rental Properties
The most common way to invest $100k in real estate is buying a rental property. Key factors to research are market rents, vacancy rates, property appreciation, and cash flow potential. Look for properties near employment hubs or amenities. Calculate your numbers to determine if it meets your return goals after expenses like mortgage, taxes, insurance, maintenance, etc.
Leveraging Low Down Payment Mortgages
While 20% is standard, there are programs that allow down payments as low as 3.5% for an owner-occupied property. This allows you to keep more capital free for other investments. However, you’ll pay mortgage insurance and possibly a higher interest rate.
Scaling through House Hacking
House hacking involves buying a 2-4 unit multi-family property, living in one unit, and renting the others. This can cover your own housing costs while generating rental income. It’s an easy way to scale into more units over time.
Passive Real Estate Investing Options
For hands-off real estate investing, REITs and real estate crowdfunding allow you to invest in larger commercial properties and portfolios. You get exposure to appreciation and dividends without having to manage properties.
Flipping Houses for Faster Returns
House flipping involves buying undervalued properties, renovating them, and selling for a profit. It offers quicker returns but requires expertise in construction, budgets, real estate markets, and managing the flip process.
With thorough research and financial planning, $100k can serve as an excellent starting point to add real estate to your investment portfolio. Rentals, REITs, crowdfunding, and flipping each offer different advantages to suit different investor strategies and goals.