How to Invest 5000 Dollars in Real Estate
Is it possible to invest 5,000 dollars in real estate? If you are following this blog, maybe you are familiar on how to double your 1,000 investment. The article suggest that if you want to double your 5,000 is by using the rule of 72. Wherein, you just divide the years from 72 to get the exact earning interest rate required to your investment to get doubled.
This should be the first topic in our real estate related articles. This discussions should only be the answer to the queries of our reader asking what can he invest in 5000 dollars in.
Hi Admin, Your blog is interesting but I prefer to not invest my money in stocks and mutual funds. May I know how should I invest 5,000 dollars in real estate? If this amount of money is not enough to buy a property, may I know what can I invest in using just this amount (to be exact, maybe $5,000 to $7,000).
JK Mayer, Toronto, Canada
Date received: July 26, 2015 @ 1:57 Pm
InvestmentTotal.com is not familiar with real estate investing but somehow know the best companies in Puerto Rico, Canada, USA and in Asia. While I am searching for the best way to make an investment worth 5,000 dollars, most experts recommended to diversify the 5,000 dollars and at least 50% of this percentage should invest in stock market.
Update: See the best websites for Toronto real estate listing.
The question pop up in my mind. Which is better stock market or real estate investing? Investing can be more profitable if you know what you are doing. In my opinion, when someone wants to invest 5,000 dollars. He should choose one of these options;
Stock Market Vs. Real Estate Investing
Stock Market: If you invest 5,000 in the stock market and earn at least 14.4% per year, your investment funds can be doubled within only 5 years.
Real Estate: Dealing with bank loans when purchasing real estate property is much easier compare to stocks. Some experts say, it is wise to invest your money on the things that you can see than any kind of paper assets. If you agree with the statement, the following suggestion is all you need to purchase $5,000 worth of real estate property.
- Look for a property (maybe commercial or residential).
- Research the market value
- Make a down payment of 10%
- Get some loan on the bank (optional)
Make 5,000 Dollars Down-Payment
If you found real estate property worth $50,000, then you can use your $5,000 as your down payment. Now you have your property. What you can do now is to fix everything. Maybe these cost you a little, it depends on the things you want to fix.
When you fixed the property, you can make money out of it by rentals. Or sell it if you want. Make sure you calculate the total amount of money you invested (down payment and the expenses when fixing your property).
When you decide to sell it, be sure to make a profit by knowing the current value. Just do the math. If your total expenses is $65,000 and someone wants to buy it $90,000, then it’s a good deal.
That’s how some other people invest 5,000 dollars in real estate. It’s just a matter of leveraging. If you don’t know what is meant by leveraging, let me explain.
Image Credit: InvestmentTotal.com on Flickr CC 2.0Leverage Investing in Real Estate
In leveraging, rich people are getting richer because they know how to use other people’s money and how to use other people’s time. In the above example, investing 5,000 dollars by purchasing real estate property is a good example of leveraging other people’s money.
You may need to learn real estate investing 101 course before you master the art of investing in this lucrative business. Learn how real estate companies make money out of developing a land and selling houses and condominiums. Also, if you know an agent, better to ask the documents when buying and selling real estate property.
House Flipping
Some people build a low cost houses and sell it afterwards. Some people flip houses, what do we mean by flipping houses?
It is the process of buying house at a low cost and sell it at a high price. If you can quickly sell your property, you can also get a quick return on your investment. But, as we discussed, make sure you fixed everything, otherwise, people will only buy the property at the same price or lower than the price when you bought it.
Summing Up
It is better to invest in real estate than in the stock market. A 5,000 dollars can use as your first real estate property. Use flipping strategy to make a quick return on your investment. Study the documents required when buying and selling real estate property.
What about you? If you have 5,000 dollars, will you invest it by buying a real estate property using leverage or invest it directly in the stock market? I want to know your comments and suggestions. Thank you!