Andrew Carnegie once claimed that 90% of millionaires accrued their money from real estate investing. So it’s no surprise so many people wish to pursue this path nowadays! The allure of wealth is hard to resist.
But how much do you need to invest in real estate to be successful?
It’s a good question- and one without a simple answer. Want to learn more? Here’s everything you need to know about the financial aspect of buying real estate for the first time.
The Cheapest Option
Most people would call you a liar and a crook if you told them they could start investing in real estate for as little as $1000.
But it’s true! Thanks to something called a real estate investment trust (REIT), individual investors can get a foot in the door for relatively small sums of money.
However, you wouldn’t be buying a physical property to live in or rent out. REITs are a type of security that’s traded on major exchanges. They’re also easy to sell (i.e. they have high liquidity) and usually offer high dividends- benefits that don’t apply to traditional real estate investments.
The Next Best Thing
Do you have between $5000 and $50,000 to invest and wish to own actual, physical real estate (instead of shares)? Consider real estate investment groups (REIGs).
An REIG offers aspiring investors a way to purchase units within apartments or condominiums. Rather than buying directly from a seller, though, you do it through an operating company that manages the entire property, handles the marketing, and so on. You pay a percentage of monthly rental income to them as a result.
Investing this much cash won’t cover the cost of an entire unit. But that’s not the point of these partnerships! By pooling investments from numerous parties, you end up with co-ownership.
Traditional Investments
If you wish to buy an entire property to rent, flip, or just to live in, then expect to pay a minimum of $100,000. Take note, though: how much money you need will vary depending on where and what you purchase!
Likewise, anybody intending to buy a discounted property to do up (i.e. fixer-upper) should factor in the cost of renovation. You might require a construction loan for this purpose. Of course, there are also down-payments, fees, closing costs, taxes, and mortgage payments (sites like trinitymortgagefund.com can help here) to think about!
All told, though, $100,000 should be enough to get you started.
How Much Do You Need to Invest in Real Estate? Now You Know
Investing in real estate has been and continues to be a great way to build wealth. However, a key question to answer before getting started is “how much do you need to invest in real estate”.
We hope the investing tips and insights in this article have shed light on the issue and given you an idea of how much capital’s required from the outset. To read more articles on this topic (and others like it), stick around and browse our blog today!