When it comes to investing, there are many options, but the one that blow other people’s roofs off it’s real estate. According to a CNBC poll, 23% of Americans think it’s the best way to build wealthand they are onto something according to the experts.
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“Real estate is much better from a risk-reward perspective than stocks. You can make a lot more money with a lot less risk,” Wall Street investment banking analyst James Berkely told Business Insider. .
Even better, investing in real estate doesn’t take hundreds of thousands of dollars.
“Real estate investment is certainly accessible to ordinary people,” says Shri Ganeshram, Founder and CEO of store, a technology-driven platform that helps people buy and own rental properties through options like buy-side representation, furnishing and short-term rental management, and Airbnb valuation tools free similar to Zillow. “There are plenty of opportunities someone could invest in with just $20,000 in savings.”
Ganeshram also points out that one of the benefits of a tool like Awning is that it offers partnerships with companies that allow investors to pool their money as a team to buy a property, making it even more accessible to a more large number of people. “Wealthy people certainly have an advantage, but many of them have built their wealth one investment at a time and it’s never too late to start,” he adds.
As for specific dollar amounts to consider before investing in real estate, Ganeshram says, “$25,000 is a minimum for an investment property right now for a traditional rental, and $50,000 at $75,000 is the range for a good Airbnb property due to the added cost. money for furniture and supplies.
If you have those savings or have access to a line of credit to pay off and want to start investing in real estate, Ganeshram has some tips for beginners – and that doesn’t mean you have to go through teardowns that require much more investment.
“There’s the house hack, in which investors live in a multi-unit house while collecting rent and covering the mortgage with that money,” he says, offering an option. “However, for most people just starting out, it’s best to invest in a traditional rental and simply focus on their main job or source of income while building cash flow, appreciation and equity through to paying off the mortgage.Then take some more savings and the money the property has earned and reinvest it.
There is also the “split investment” option as you can with options like the Here app which allows you to buy shares in an investment property almost like shares. “It’s a possible entry point, but it doesn’t have many of the benefits of real estate,” Ganeshram warns. “Homeowners don’t accrue the tax benefits of being an investor (mortgage interest deductions are an example) and they have little or no control over investment returns. … All in all, if you’re short on capital to invest, it’s best to team up with other people in the same situation, then it’s to buy shares in an investment you have little on or no control.
Ganeshram also points out that there are other financial investments to consider before getting into real estate, such as insurance.
“It’s usually more expensive [for investors] and you’ll want to do your due diligence on the property by reviewing inspection reports and bringing in the professionals to investigate any issues. Having a good agent is the biggest predictor of landing a good investment,” he says, noting that an agent can find good properties across the market, analyze deals, and steer clients away from bad deals, which will ensure the success of the investor.
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He also offers some hot market tips to consider when you’re ready to invest:
Long term rental : “Parts of Texas like Houston and the Dallas-Fort Worth area still show strong returns for investors.”
Short term rental: “The Blue Ridge region of Georgia is doing very well with many opportunities and a good regulatory environment.”
Investors with more capital: “Parts of Florida and California with beaches, wineries, and theme parks have amazing properties to convert to Airbnbs.
Cash-strapped investors: “Look at the Atlanta area and parts of Alabama like Birmingham where there’s strong job growth and relatively cheap real estate.”
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This article originally appeared on GOBankingRates.com: Invest in real estate? You only need this amount of money saved to get started
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