How Much Money Do You Really Need to Start Investing in Real Estate?

Real estate investing is more popular than ever, but many people think that they don’t have enough money to justify real estate investments. 

It’s true that investing in real estate is more expensive than investing in the stock market (at least initially) but it’s not as expensive as you might think. But how expensive is it to start investing in real estate?

We’re here to talk about it. Keep reading to learn all about how much money you need to invest in real estate.

First: The Real Estate Investment Trust

The first and most affordable option for real estate investing is the real estate investment trust. This allows you to invest in a small portion of real estate (rather than an entire property) and keep your assets as liquid as possible. 

You may only need $1,000 to start investing if you choose this option. It isn’t as profitable as other types of investment, but it’s a great method of real estate investing for beginners. 

Real Estate Investment Groups (REIG)

Becoming a part of an REIG is another affordable way to invest in real estate. You can start for as little as $5,000, though it’s often far more expensive.

For this cost, you become a co-owner of a single unit within a property (like a single unit of an apartment building, for example). A management group owns the property and deals with all of the behind-the-scenes work so you don’t have to.

This won’t net you as high of a profit as investing in an entire property, but it’s far more affordable than true property ownership. 

Property Ownership

If you have some money from a thrift savings plan, your savings account, or other investments, you can consider property ownership. You could also rent out rooms within your own home, a second home, or even a home that you no longer use (if, for example, you’ve moved into a retirement home).

The cost of your property will vary depending on your location and the type of property that you plan on owning. Some people can buy entire homes or apartment units for under $50,000 if they live in small towns, but in large cities, you’ll need far more. 

Remember that you can put down money for a home and get a mortgage, but even this will require up to 20% for a down payment. If your building has multiple units, you can pay off that mortgage with rent payments.

If you choose this option, you’ll need to pay for inspections, repairs, renovations, and everything else that goes alongside keeping a property habitable. 

Do You Have The Money to Start Investing in Real Estate?

Investing in real estate isn’t cheap, but it’s a relatively safe investment in the current housing market. Owning property gives you longer-term benefits than other intangible investments.

If you have the funds to start investing in real estate, start talking to a financial advisor today.

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