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7 Smart Ways to Invest $100K in Real Estate

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If you’ve got $100,000 to invest and are looking for a way to grow without taking on too much risk, then real estate might be your best option.

Most people think of millionaires when they hear “real estate investors,” but anyone can get started with just their down payment!

However, purchasing a rental home isn’t difficult. You don’t need a significant amount of money to start real estate investing.

If you want to get started, you only need a few dollars. So, here are seven smart ways to invest $100k in real estate — from rentals to REITs.

1. Buying a House or Second Home: Which Is Better for You?

7 Smart Ways to Invest 100k in Real Estate

Many individuals are unaware that their house is a financial investment. The idea of putting money into your residential property is a great one.

Not only does it increase in value over time, but you also get an unbeatable place to live rent-free during retirement years!

On the other hand, a second home is a perfect investment for those who want to diversify their portfolio or have extra income.

Housing/Primary Residences:

Buying a house or primary residence is generally considered the highest-risk investment in real estate, and it often is.

That can be due to a handful of reasons:

  • missed major foundation or roof issue that leads to structural damage and high repair costs,
  • missed plumbing/HVAC/roofing issues that lead to higher monthly utilities and repair costs,
  • low demand for housing in an area that leads to ongoing vacancies,
  • cost of purchasing and maintaining the home in non-profitable areas, etc.

If you’re starting out investing in real estate, it’s best to look into rental properties instead of primary residences for these reasons.

Second Homes/Investment Properties:

Second homes or investment properties are typically considered more dangerous than housing due to low demand and vacancy periods that can last up to a year or two.

That means you might have to either sell for a loss or rent it out at a lower price than what you purchased.

It’s best to put as much money into your home as possible so you don’t miss out on equity gains if the property value goes up.

2. Becoming a Landlord for a Rental Property

7 Smart Ways to Invest 100k in Real Estate

Becoming a landlord is one of the most common types of property investments. It’s also a great way for those who want to invest their money wisely and know how much goes into each investment!

Investing in a rental property is like investing in real estate. Investors know that real estate is a good investment and often safer than the stock market.

However, investing in a rental property can be very dangerous if not done correctly. Sadly, many investors do not realize the dangers of becoming a landlord and buying a rental property. Some even consider it as nearly risk-free. 

First, if the rental property is vacant for too long, you will lose money because you’re not making any. How much you lose depends on your market and the prices of homes in your area.

It could be anywhere from $500 to $5000 per month. Also, there are costs associated with owning a rental property.

There’s insurance, taxes, maintenance, and repairs to pay for, not to mention the time you must dedicate to your tenants.

Many of your rental homes may need new foundations, roofs, or structural supports because they are in poor condition. There are new maintenance and improvements to be made every year. 

People’s main problem is a lack of time or money to handle a rental property. If you have $100,000 to invest, set aside some money for future expenses. Don’t expect a quick return, as it will take some time.

The easiest way to invest $100,000 in real estate is to use this same strategy for several properties.

3. Buying a Portion of a Commercial Property

7 Smart Ways to Invest 100k in Real Estate

I’ve heard some pretty wild stories about people who have invested in real estate. A few are so passionate about their investments that they only want the best, which is why you should take my word on this one!

If you’re looking to invest in real estate, commercial properties are an excellent asset class. Most people think they need millions to be an asset class and have many opportunities available with 100 grand or less!

Momentum Investing can help ease this pressure by providing higher yields with less capital at minimal cost!

Commercial real estate is a booming industry with many opportunities for investors. As the economy improves, people often want to buy commercial properties to make money off their investment and enjoy its benefits.

If you own a house, you can sell or lease out different parts if you want. You can buy shares in the place or take over leases when someone else owns them.

The question is, how do you get into this? How long does it take to buy a commercial property?

Investing in commercial real estate has been made easier now more than ever. You only need $500 to invest, and you will get all the benefits! 

Momentum Investing is a company that can invest in commercial properties with as little money as $500. They take an existing business and make it more efficient by reducing overhead costs. Then they rent out the properties to tenants.

Commercial properties are a great way to invest your money in an asset that performs well and has good returns. The best part about purchasing commercial property? It only takes a little cash upfront. So if you’re looking for the least amount of capital possible when investing – this may be just what’s needed!

4. Public or Private REITs - The Best Option

7 Smart Ways to Invest 100k in Real Estate

What does REIT mean? It means real estate investment trust. There are four main types of REITs that you can invest in. There are:

  • Public REITs
  • Private REITs
  • Indexed REITs
  • Master Limited Partnerships (MLPs).

How do they differ? Let’s break down each type, so you better understand the differences.

Public REITs are REITs that have been listed on a public stock exchange. A publicly-traded company can be bought and traded like any other company.

How do you invest in Public REITs? You can purchase partial ownership of them through your brokerage account, similar to buying any other stock or company.

On the other hand, Private REITs are not listed on a public stock exchange. You can’t buy shares of them or trade them the same way you would Public REITs.

How do you invest in Private REITs? Private REITs are a collection of real estate assets, such as apartment buildings and shopping malls. You can purchase it in your investment portfolio.

Indexed REITs track a particular REIT index instead of one portfolio or building.

How do you invest in Indexed REITs? Indexed REITs are an attractive investment for those who want to diversify their portfolio. Indexed REITs provide investors with a low-cost way of investing in real estate, and they can be a great addition to your existing stock holdings.

Master Limited Partnerships are like Public REITs but only have the benefits of being a limited partnership. They share most of the same benefits as owning shares of a REIT, but without drawbacks.

How do you invest in Master Limited Partnerships? Master Limited Partnerships, or MLPs, have been around for more than 40 years.

They are like a company. They invest in producing and transporting natural resources like oil, gas, and coal.

These investments generate stable cash flows with low volatility. Many investors prefer real estate to stocks because real estate is less volatile than stocks.

Many people don’t know how to invest in these partnerships, but it’s pretty simple!

MLPs work like any other stock on a major exchange to buy shares at the market price. However, unlike most stocks that pay dividends taxable as income, this is not the case with MLPs.

MLPs pay distribution payments treated as an interest-like return on your investment.

The main thing to remember when it comes to public and Private REITs is to diversify your investment portfolio.

Remember, both Public and Private REITs are very low risk compared to directly owning real estate. So if one does go down in value, it shouldn’t affect your entire investment portfolio or cripple you financially.

5. Becoming a Partner in a RELP

7 Smart Ways to Invest 100k in Real Estate

Are you ready to start investing in real estate? How should you go about it?

How can you participate in the returns that come from this asset class while limiting your risk as much as possible?

The answer is by becoming a partner in a RELP (Real Estate Limited Partnership). A real estate limited partnership is a company that acquires property to sell it.

The main benefit to this kind of investment is that you don’t need to do much work.

It’s suitable for people who want to invest but can’t or don’t want to spend much time on it.

It’s also beneficial to investors because they receive tax breaks on their gains and losses from the property.

What are the benefits of participating in a RELP? As mentioned before, participating in a RELP is that you receive tax breaks.

Because you are not responsible for overseeing any of the properties, there aren’t many ways you can lose money.

But how much money do investors typically make? Typically, investments within RELPs start at around $100,000 and go up from there.

How much you make depends on how many partners are in the company and what property they buy.

The more properties they control and the better these properties are, the larger their profit margins will be.

6. Flip a house or condo

7 Smart Ways to Invest 100k in Real Estate

There are many ways to invest in real estate. But flipping a home is one of the easiest and most lucrative options for those who don’t have a lot of cash but want to make some money from their investment.

First, you need to understand how it works. So, how does flipping work?

To start this process, you should investigate different areas experiencing a housing market boom. Then you need to find a few good properties. Be careful about your timing.

It is not easy if you plan to buy a house and flip it quickly. Completing the renovations is an integral part of the process.

Every house should be unique. When you are done with the renovations, you should start thinking about your sales strategy.

How much money can you make? On average, you can make 25% of the money you spend on the home.

Of course, this percentage will change depending on many factors, such as how much money you spend and how quickly you sell it.

You also need more than personal experience and knowledge to make this financially rewarding.

Many people seek professional support from real estate agents and financial specialists to help them complete their projects and maximize their profits.

Also, flipping homes require substantial cash, and you should be prepared for this. You can start with little money; however, you will need some funding as you enter the market.

Fortunately, you can make a few hundred thousand dollars from your investment.

7. Investing in a Stock or Mutual Fund: Which Is Better for Your Money?

7 Smart Ways to Invest 100k in Real Estate

Investing in a Stock or Mutual Fund is one of the most common ways to maximize your investment return.

How do you know which investment is the best for your money? To answer this question, let’s first go through a short tutorial on how each type of stock or mutual fund works.

Stock Market: How Does it Work?

Investing in a Stock Market is relatively straightforward. You have to purchase stocks from different companies that you think will go up.

You can ask your friends, parents, or co-workers for advice. If you’re still unsure about where to start, you can always buy random stocks at random prices or look them up on the internet.

The problem with this method is that the stock market is more unpredictable than exchange-traded funds or index funds.

So, even though they aren’t as attractive as stocks with rising earnings, there is still potential for significant losses.

As a result, many people get too excited about stock market investments and get caught up in day-trading or investing in high-risk assets such as real estate (which we’ll talk about later).

How much money you make vs. how much money you lose will depend on where and when you buy them.

ETFs: How Do They Work?

ETF stands for exchange-traded fund. Buying an ETF is similar to buying a stock from the stock market, but with some differences.

You don’t have to make as many decisions because you’re letting someone else manage your money for you. How do they manage it? They try to replicate an index or a set of rules.

How does this make your life easier? It means you don’t have to worry about looking at company prices, reading stock reports, or anything else. You invest in an ETF and let it run its course.

How do you know if the ETF will do well? How much money you make and how much money you lose depend on the index or set of rules it follows. If it does not follow those rules, then your money might lose.

Index Funds: How Do They Work?

An index fund is a mutual fund that invests in a broad range of stocks within a specific market segment.

For example, an index fund invests primarily in stocks from emerging markets. How much money you make vs. how much money you lose will depend on those market segments and when you buy the index funds.

How Does a Financial Advisor Help You?

If you are getting started in investing, you have two options: invest through your bank or use the services of a financial advisor. Here is where a financial advisor comes in.

The reason people typically go with a financial advisor has more to do with achieving peace of mind.

A financial counselor may be able to assist you in investing $100,000 in real estate. You can build a well-diversified real estate portfolio with the help of an advisor.

The index fund is usually more stable than the stock and will offer lower risk in your retirement.

Don’t be fooled by what might seem like a good opportunity for high returns on volatile investments, such as stocks or bonds. They can become expensive if inflation rates increase over time (which has happened many times).

But when you’re young, the best way to invest your cash is in stocks. Stocks will improve over time!

A fractional share is a way to make money. You buy less than one whole share of another company, and they pay you cash.

That is cheaper than buying a whole company.

Frequently Asked Questions

The short answer to this question is no. You don’t need $100,000 or more to start investing in real estate.

However, you could also start a company. You might want to do this if you have $100,000 or more. Besides, if you’re going to invest your money, you must find a way to make your money grow, and it should be working for you.

Unfortunately, many people think they need $100,000 or more to invest in real estate. Many of these unfortunate individuals are not just looking to invest the money.

Instead, they want to earn big bucks by investing in real estate so they can pay off debt and retire early.

Anybody can invest in real estate. How much you plan on investing will determine what you want to do when investing in real estate.

For instance, if you only have $1,000 to invest in real estate, then chances are that your options are limited.

So, qualification is not essential in the real estate market. Suppose you want to accomplish something advanced, such as to invest in a real estate property through a self-directed IRA (individual retirement account). In that case, you’ll need the assistance of an expert.

It’s easy to buy property, units, equities, and mutual funds.

Real estate investment alternatives are mutual funds that invest in real estate properties.

I highly recommend mutual funds because they are the safest real estate investments out there.

How? It’s because mutual funds tend to hold individual stocks or bonds within the same fund. This diversification helps reduce the risk of doing poorly with a single real estate market.

Real estate investments that could lead to the potential loss of a considerable amount of money are the most dangerous to make.

A basic example is flipping or buying real estate and immediately selling it for a profit.

Flipping a property is one of the riskiest real estate investments because it does not offer much growth potential.

When you buy and sell the property within a short period, this leaves you very little time to learn about the market or make any money by selling services or products to tenants.

The second most dangerous real estate investment to make is to invest 100% of your money in rental properties without holding any other investments.

It’s difficult to determine what sort of investment is best for a specific person. You should consult with a financial advisor before investing money, particularly a large sum of cash.

If you plan to invest $100,000 or more, you should first consult a financial planner. Their assistance will help you avoid the pitfalls of investing in real estate.

When investing in real estate, you may want to consult with:

  • your tax accountant,
  • financial advisor, and
  • investment real estate agent.

These individuals can help you make well-informed decisions about investing in real estate.

People often ask, “Is it possible to invest in real estate through a retirement account?”

Yes, you can! If you’re looking for a way to invest $100,000 in real estate, there are several options. You may invest in real estate-specific stocks and mutual funds. Again, if you have a self-directed IRA, you can use it to make any investment.

Final Words

If you’re looking for ways to make money or invest your hard-earned cash, investing in real estate is something you should consider.

Do your research to make wise choices and avoid unpleasant surprises.

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