Here’s How You Can Earn a Fortune by Investing $10K in Real Estate Today
If you are willing to diversify your portfolio and want to invest in real estate with $10,000 in hand, you need to have a solid strategy. To begin with, here are some of the things that can help you achieve that. For you, $10,000 may look like a sufficient amount to get you started with real estate investment, but in reality, this much money will not take you very far. How so? Let’s understand this first.
In today’s time, the average home price is around $408,100 with a 20% down payment, the amount you need for an investment loan, which would be over $81,000. That’s exactly $71,000 more than what you are ready to invest. Fortunately, there are much better and more affordable ways one can invest in real estate. If you are looking for a way to invest $10k in real estate right now, here are some ideas that can help you.
Invest in Real Estate Investment Trusts or REITs
Real estate investment trusts, or REITs for short, provide access to the investors to high-quality real estate portfolios in almost every way one can imagine in the real estate industry, all of which are owned and managed by a professional third-party company. These distinctive real estate stocks require investors to follow strict rules to benefit from certain tax advantages of the REIT structure.
For example, 95 percent of the income should be earned either directly from real estate or from real-estate-related securities such as mortgages. REITs should pay 90% of the taxable income in the form of dividends, equivalent to the reliable, higher-earning dividend returns for investors.
REITs surpassed the S&P 500 in 2021 by around 10 percent and even outperformed S&P 500 over the past 20 years, making them an attractive long-term play for investing in real estate.
Spread out in Different Industries
The key to finding success with any sort of investment is diversification. Like many other industries, real estate is not impervious to economic challenges, and what is affecting one industry might not impact another. To reduce your risk exposure, it is important to be aware of the risks and opportunities within each industry and diversify your $10,000 by investing in different sectors of real estate.
The highest performing sector amongst all REITs is self-storage. In 2021, it generated a 79 percent return on investment, maintaining an 18 percent return on investment for the last 27 years. Public Storage (PSA 0.7 percent) is a popular option among the self-storage REITs since it is the largest self-storage REIT with a super high-quality international portfolio. It is rapidly expanding its portfolio in 2021 by adding 232 facilities for a record $5.1 billion, creating a strong root for 2022 and beyond.
A High Return Is Guaranteed
Since the demand for rental housing and industrial space is increasing rapidly, these residential and industrial real estates are giving self-storage a good run for their money. The rise of e-commerce, supply chain challenges, and lack of housing have all stimulated exceptional growth in these industries, generating a 62 percent return for industrial REITs and a 58 percent for residential REITs in 2021.
Residential operators like Mid-America Apartment Communities (MAA -0.37 percent) or Camden Property Trust ( CPT -0.26 percent), which have remarkable exposure in the Sun Belt, are seeking increased lease rates, rental growth as well as lesser vacancies than peers in the higher-density gateway markets, making them preeminent in today’s market.
Investing in data centers and communications infrastructure is also a great option since dependency on technology is growing rapidly. American Tower (AMT -0.63 percent) is a great option if you are planning to invest in this area. The industrial estate can also be considered worthy of investment with Prologis (PLD -1.39 percent) being one of the top-performing REITs in its sector.
Purchase and Hold for a Longer Time
Like any stock investment, real estate investment should also be held back longer. Even though REITs give great returns over the years, it is not every year that this happens. Being patient to come to terms with the market instability means that you are preparing yourself for long-term success.
For the last 20 years or more, REITs have constantly surpassed the regular stock market, proving it worthy of investment. With the current announcement of its top 5 REIT investments, in our opinion, it is the best time to consider investing in real estate. Just do not rush and keep a close watch on the real property market trends to become a savvy investor.
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