But, for this article, we’re narrowing our focus to the $50,000 range. Whether you have inherited funds, sold another asset for a windfall, or even won some money in the lottery, this guide will introduce you to seven smart ways to use your $50k to invest in starting (or growing) your real estate portfolio.
7 Ways to Invest $50k in Real Estate
So, how should you invest $50k in real estate? Here are the top seven ways…
1. Long-Term Single-Family Rental Property (In an Affordable Market)
Long-term rentals are a classic real estate investment model for generating cash flow while appreciating over time and offering tax benefits. You buy a property, find qualified tenants to rent it out (typically via a lease of 6-12 months), and collect rents while taking care of the property. Even if cash flow is slight in the early years of ownership, rental rates tend to increase over time, and once the mortgage is paid off, the cash flow skyrockets.
Naturally, $50K won’t go far toward a down payment and closing costs in a high-value market, but it may be enough for a 20% down payment on a single-family rental property in an affordable market.
Assuming 4% in closing costs, a $50k investment could buy a home priced at around $208,000. It is still possible to find turnkey properties at this price point, particularly in parts of the Midwest and the South. This would prevent you from having to cover (or finance) renovations. However, it’s important to crunch the numbers to make sure local market rents are high enough to bring in positive cash flow after your mortgage, property taxes, insurance, and maintenance expenses.
Pros and Cons of Investing $50k in a Long-Term Single-Family Rental
Hiring a property manager makes the investment more passive, but costs money
2. A Short-Term Vacation Rental (In an Affordable Market)
Unlike long-term rentals, with their 6-12-month leases, short-term vacation rentals can be rented out by the month, week, or even by the night.
Short-term vacation rentals typically command substantially higher nightly rates than long-term rentals, and as the owner, you can typically access the property for personal use as you like (unless the property is held in a self-directed retirement account).
As is the case when purchasing a long-term rental, you’ll likely need 20-25% down plus closing costs. You’ll also be expected to fully furnish the unit (down to the coffee filters), which can further limit the purchase price. A condo may be out of range, but a rustic cabin in an affordable market may work.
Pros and Cons of Investing $50k in a Short-Term Vacation Rental
Pros
Cash flow and appreciation
Tax benefits
Full control over the asset
Higher nightly rental rates than long-term rentals
Possible access to the property for personal use
Property management can be hired to make the investment more passive
Cons
High upfront and ongoing costs
Require more active maintenance than long-term rentals
Less stability than long-term rentals
Property managers charge more for short-term rentals
Local regulations may affect operations
3. House Hacking
House hacking is when you use your primary residence to generate income. This isn’t the right fit for everyone, but many investors have house-hacked their way to wealth.
There are multiple options for using $50k to house hack, including:
Building an ADU. ADUs (accessory dwelling units) are secondary living spaces on a residential lot. This could be a converted garage, basement, or attic, or a stand-alone structure. Check your local ordinances for regulations on such structures before planning one.
Purchasing a multi-family property and living in one of the units. So long as you live in one of the units as your primary residence, you may qualify for low-down-payment financing on a multi-family property with up to four units. This could mean 5% down with a conventional loan (or even 0% down if you qualify for VA loans or USDA loans), allowing you to buy a property worth $500-$600k.
Building storage or event space on your property. If you have land available, you could invest $50k in building storage or event spaces that can be rented out. Again, it’s important to make sure your zoning and local ordinance allow for this type of enterprise on your property.
Pros and Cons of Investing $50k in House Hacking
Pros
Easy to start
Proximity may make physical property management easier
Favorable financing options
Multiple options for implementation
Interesting learning experience
Cons
Requires the use of your personal space
May be limited by local regulations
Returns vary dramatically by location and method used
Could change your homeowner’s insurance requirements
4. REITs
REITs (Real Estate Investment Trusts) are companies that own and manage portfolios of income-producing real estate. When you invest in a REIT, you’re essentially purchasing shares of that company. In return, you receive a portion of its profits through regular dividend payments. Those dividends can be used as passive income or reinvested to buy additional shares, allowing your returns to compound and grow over time.
Because each REIT holds multiple properties, it offers built-in diversification. You can further reduce risk by spreading your capital across several different REITs. However, this type of whole fund investing means less control for you. You may not even know which properties are included in a given REIT.
REITs come in two main forms: public and private. Public REITs trade on major stock exchanges and are available to all investors, like ordinary stocks. Private REITs, on the other hand, are not publicly listed and often require investors to be accredited (meaning they meet the Securities and Exchange Commission’s (SEC) minimum standards for income or net worth).
Private equity may be old-school, but it’s still a viable option for investing $50k in real estate, particularly if you happen to be well-connected to other investors and financial managers.
Private equity is when private parties pool their funds to invest in a specific real estate project or portfolio. The “private” nature of this arrangement means that these deals cannot be offered to the general public according to SEC regulations. This means you need to have an “in” with other investors who have the experience and resources to find and pursue these deals. And you need to trust them with your money.
Pros and Cons of Investing $50k in Private Equity
Pros
Cash flow and/or appreciation (depending on the deal)
Under the right management, the right deals can provide strong returns
Access to larger deals than you could finance alone
Cons
Available only to accredited investors
You need industry connections to find opportunities
You have to trust your partners with your money
6. Real Estate Crowdfunding
Over the last decade, real estate crowdfunding has become an increasingly popular way to invest. Much like private equity, it allows multiple investors to pool their money to fund a single project. The key difference is that crowdfunding platforms often open these opportunities to the general public. This makes it easier for everyday investors to participate in deals that were once limited to institutions or high-net-worth individuals (HNWIs). Because of this broader reach, minimum investment amounts tend to be much lower.
Each crowdfunded project is overseen by a real estate sponsor, who handles all major decisions, from vetting properties to supervising construction/renovation to managing daily operations.
With around $50,000 to invest, you can either put all your capital into one project or spread it across multiple properties for instant diversification.
Pros and Cons of Investing $50k in Crowdfunding
Pros
Cash flow and/or appreciation (depending on the deal)
Lack of control over design or management decisions
Lower liquidity than publicly traded REITs
May require accreditation
7. Real Estate Syndication
Real estate syndication operates very much like crowdfunding. In fact, the terms are often used interchangeably.
The investment model is basically the same: multiple investors from the general public pooling funds to invest in a professionally-managed deal. But there are a few key differences, mainly relating to ownership structure. With syndication, investors become limited partners in the entity that owns the property (with the sponsor serving as the general partner). This gives you a true equity stake in the underlying property rather than just a share of profits.
Like crowdfunding and private equity, syndication offers access to a broad range of opportunities, including more complex projects, like multi-family developments. Minimum investment requirements vary, so an investor with $50,000 could buy a greater share of a single property or diversify across multiple projects, depending on the platform and deal specifications.
Pros and Cons of Investing $50k in Real Estate Syndication
Pros
Cash flow and/or appreciation (depending on the deal)
High return potential
Low investment minimums
Flexible offerings
Passive returns with professional management
Access to deals beyond your means
The ability to easily diversify
Deal-by-deal control
Higher liquidity than direct ownership
Tax benefits
Cons
Lack of control over design or management decisions
Lower liquidity than REITs
Limited to accredited investors
How to Invest in Real Estate Syndication
While direct ownership may be the right fit for hands-on investors willing to personally shoulder the full financial burden and maintenance responsibility, syndication offers significant benefits for investors who prefer passive returns with equity ownership.
Gatsby Investment, for example, has provided average annualized returns of 22.3% for investors since the company’s first completed year of operations in 2017! With a 100% profitable track record, thousands of investors have trusted Gatsby with their money over the years.
Investment minimums for multi-family opportunities typically start around $25k, allowing you to invest in a larger share of a single property or split your funds across two properties for instant diversification.
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