Just how much money do you need to invest in real estate?
If you’re asking this question, it’s clear you’re ready to become a real estate investor. This is a smart decision. Investing in real estate is an ideal way to grow your wealth.
What’s not clear, though, is the amount of money you need to get started it. You’ve come to the right place.
In this article, we’re are sharing expert insight on how to get your capital right before investing in real estate.
Let’s crunch the numbers. Shall we?
How Much Money Do You Need to Invest in Real Estate?
You’re probably expecting a straight-up figure – something like $100,000 or $550,000.
Well, we’re going to disappoint you. While we’d love to answer your question right off the bat, it’s hardly possible to do so. This is because your capital requirements will vary depending on, among other things, the type of real estate investments you want to make. The difference can be significant.
In other words, some real estate investments are capital-intensive, while others are not. Here’s a brief lowdown of the various factors that’ll determine that amount of money you’ll need to get started.
The Type of Real Estate Investment
There are different types of real estate investments you can make. They include:
- Commercial buildings
- Residential buildings
- Raw land
- REITs
- House Flipping.
The first three are the most common types of real estate investments, while the last two aren’t as common.
Investing in buildings, whether commercial or residential, is costly. Considering that the median price of a house in the United States is about $220,000, it’s safe to assume that you’ll need no less than $200,000 to get started. Land is equally capital-intensive but substantially cheaper than investing in buildings.
REITs offer the cheapest way to invest in real estate. A REIT is a company that owns profitable real estate assets. All you have to do is invest in a REIT of your choice.
REITs have different minimum investment requirements, but it’s possible to invest as little as $1,000.
House flipping is an unconventional way to invest in real estate, but it’s becoming increasingly popular. It involves buying houses, fixing them up, or waiting for market prices to move, then selling them at a profit. Still, you need a lot of money to get started because buying a house, even if it’s one that’s not in the best condition, is a pricey affair.
Location
The location where you want to make a real estate investment can also determine the amount of money you need to get started.
In New York, for instance, real estate prices are sky-high, not just as a buyer, but also an investor. The same applies to most cities.
It’s important to do sufficient research on various locations before making a move. Here is a resourceful guide if you’re eyeing the Pittsburg market.
Economic Conditions
The economy has a big impact on the real estate market.
When the economy is expanding, real estate prices go up. When it’s slowing down, prices come down, often hitting major lows during a recession. As an investor, you want to go in when prices are low.
Real Estate Is a Capital-Intensive Investment
So, how much money do you need to invest in real estate?
It’s impossible to give a straight figure, but unless you’re investing in REITs, real estate is a capital-intensive investment. You need to secure funding to the tune of hundreds of thousands to get started.
Keep reading our blog for more real estate investing insights.
