Many investors struggle to save money for investments. For those in their early 30s, this can mean saving money, skipping trips to restaurants, countries, etc. It might not be a large amount of savings, but it is the fruit of hard work and dedication. So how does one make the best use of it?
Let’s say you save $25,000 in capital. You can put it into an IRA or 401k, but most career professionals already have one or both of those. It could be invested in random stocks or cryptocurrencies that catch one’s eye, or it could even be saved in a high-interest account. You might even invest in a friend’s or family member’s growing business.
How about real estate? Real estate investing might be another option. The question is, how can $25k be invested in real estate? Doesn’t the market need more money?
Let’s look at how someone can invest $25k in real estate.
Why Should You Invest In Real Estate?
The advantages of property investing are numerous. Aside from generating passive income, tax benefits are the #1 reason to invest in real estate. In addition, tenants can pay down your loan or mortgage, and the property will naturally/forcedly appreciate in value, both of which allow equity growth in the property. In other words, as the value of the property increases, the difference between your loan and property value grows. The difference between what it costs you and what you owe grows as the loan is paid down.
A return on capital is all that most other investments offer. The real estate market is different.
If you’re looking to invest in real estate, you should learn more about your financing options such as VA loans and their benefits here.
What Is The Best Place To Invest $25k?
How does one invest $25k into real estate? Doesn’t buying real estate require more than $100k or $200k? Real estate investment doesn’t require one to be a billionaire or millionaire. It just takes a little capital, a partnership, and some determination.
Check out these five ways to invest $25,000:
- Participate in a real estate syndication,
- Buy real estate with a partner, another investor, or a group,
- Spend $25k on a property in a cheaper market out of state,
- Take advantage of seller carryback financing to invest $25k in any priced property.
- House-hack: invest $25k down 3% rental primary residence.
Many people use real estate to protect and grow their wealth. The first two are considered more passive investments, while the third and fourth require more time commitment.
We’ll look at five more bonus ways to invest $25k:
- With a vacation home loan, you can invest $25k in a second home (a rental) with only 10% down!
- Perform a BRRRR with a $25k investment, alongside borrowing some capital from lenders. The capital can be returned 6-12 months later, but you own the property.
- Make a $25k investment to buy a primary residence and flip it for 3% down, where you live in the house and upgrade it before selling it again.
- $25k can also be invested in a REIT, a publicly traded stock that invests solely in real estate.
- As a private lender, invest $25k for a return and interest rate to another real estate investor.
If you are new or inexperienced in the real estate market, you should consider hiring a realtor. Check our our tips for choosing a realtor here.