Most people know that real estate is a solid investment. Most people also think they can’t afford to invest in real estate. It’s no secret that real estate is expensive, and the high acquisition cost is something that scares many investors off. As far as most people know (or think), the only way to invest in real estate is by spending a lot of your own money and/or borrowing a lot of money from a bank to buy property. Luckily, that isn’t the case anymore. Believe it or not, you can begin investing in real estate with as little as $1,000.
Why Invest in Real Estate?
The simple answer to this question is because it works. Historically, real estate investments have offered steady growth with a lot less volatility than other types of investments, such as stocks or bonds. In fact, just the simple act of purchasing a family home has proven to be one of the best investments you can make in America.
The miracle of appreciation means that almost any property you buy will be worth considerably more by the time the mortgage is paid off. This increase in value is usually slow and steady, but can also be explosive for investors who buy properties in emerging markets before they take a huge upswing in value. The other advantage of this slow and steady growth is that it requires relatively little from the property owner outside of routine maintenance and on-time debt service.
Every day, you hear stories of companies going belly up or stocks taking major dives on some horrible day of trading that becomes forever remembered as Black Monday or something like that. By contrast, you rarely hear about homeowners and landlords just going belly-up overnight.
Even when real estate investments do lose value, they almost always bounce back. That’s why real estate investing has such a strong track record of building wealth with minimal risk. That’s also why you should consider investing in real estate — even if you only have $1,000 to spend.
Who Can Invest in Real Estate?
Anyone! That’s right, anyone can invest in real estate. The old logic that you already have to be rich to invest in real estate simply doesn’t hold true anymore. The important thing to realize is that real estate’s history of appreciation means the longer you wait to invest, the more expensive it’s going to get when you finally make the investment. So, why wait?
You’ve got to get into the market somewhere, and just like your first job wasn’t the most glamorous, high-paying gig you ever had, your first real estate investment may not be a gleaming, new luxury apartment building. With that said, the sooner you begin investing, the sooner you can begin building wealth. That goes for you and all your friends. A list of the type of people who could benefit from investing even $1,000 in real estate includes the following:
- Recent college graduates
- Married couples
- Single parents
- Single people
- Grandparents (either for themselves or for their grandkids)
- Real estate agents (yes, them too!)
This list could go on forever. That’s because real estate is such a solid investment, there is scarcely anyone who wouldn’t be well served by making a real estate investment.
Remember, the goal here is to grow wealth. So, worrying about the fact that you don’t have enough money to invest and grow wealth is looking at the problem from the wrong perspective. Think about the piggy bank you had as a child. Did you not put extra pennies in your piggy bank because it was only pennies instead of silver dollars? No, you started small by pinching pennies. Soon, you had enough money in the piggy bank to go buy whatever it is you were saving money for.
The idea of investing $1,000 in real estate is basically the same principle. Rome wasn’t built in a day and your real estate empire won’t be either. Think of your $1,000 as the first brick in your personal yellow brick road. You have to start somewhere. The sooner you start laying these bricks, the sooner you can begin walking the path to a solid real estate investment portfolio.
How to Invest $1,000 in Real Estate
This is the rub, isn’t it? You can’t buy much property (if any) anywhere for $1,000 unless your favorite uncle quit claimed a house to you for peanuts. But again, it’s a brave new world and there are now lots of ways to invest in real estate without actually buying property.
Real estate investment trusts (REITs)
REITs are managed funds that buy, sell, manage and trade real estate all over the country. REITs have diverse property portfolios, and their diversity is their strength. Better still, REITs are managed by experienced professionals, which means you don’t have to deal with tenants, toilets and complaints like you would if you were managing income property yourself.
Real estate crowdfunding
Real estate crowdfunding is a new real estate investing trend that uses the business model established by sites like GoFundMe to buy real estate. The neat thing about crowdfunding is that it’s opened up real estate investing to an entirely new class of investors who may have been frozen out by the cost in years past. Many crowdfunding sites also offer you a level of investor control by allowing you to pick and choose which properties you invest in.
Partnering with friends and family enables you to pool your funds until you have enough money to put a down payment on an investment property.
Wholesaling is when you can find a property for below market, put in a bid for it and get it under contract. Then you can assign the purchase contract to an investor at a profit. You may only need $1,000 in earnest money to enter into a contract on a property for sale and then flip the contract to someone else. Keep your eyes peeled for these opportunities.
Rent your old house
You can rent out your old house that’s just sitting around generating a tax bill for you. Take $1,000 to spiff it up and make it rent-ready. Then you can put it on the market and begin earning some residual monthly income. Even if the renovations run slightly more than $1,000, it makes no sense to have a perfectly usable property that you’re not making money off of. Otherwise, you’re paying taxes and insurance to maintain it, which makes it a money pit.
Maximize the property you already have
Are you using the basement in your home? Have you got a garage or a bedroom you’re not using? Why not add some appliances to the basement and rent it out? You could do long-term leasing or a short-term contract with AirBnB (NASDAQ: ABNB), which works especially well if you live in an area that has an active tourist season. You could also slap a fresh coat of paint on the door of that garage you’re not using and rent it to someone. There is almost certainly someone in your neighborhood who needs extra parking or storage space and would be happy to pay for it.
Benzinga’s Best Real Estate Investments
If you’ve got $1,000 you want to invest in real estate but you’re simply not sure how to do it, there is a place you can go for investment ideas. Benzinga is a great resource for would-be investors. One of those resources is a list of the best real estate investments!
- Best For:$100 Minimum Investmentsecurely through Arrived Homes's website
- Best For:Low Cost Real Estate Investingsecurely through Diversyfund's website
- Best For:Non-accredited Investorssecurely through Groundfloor's website
- Best For:Diverse range of alternative assetssecurely through Yieldstreet's website
The Bottom Line on How to Invest in Real Estate With $1,000
Contrary to popular belief, you don’t have to be rich to invest in real estate. If you’ve got $1,000 to invest, but you don’t like the unpredictability of the stock market, there are a number of ways you can put that money into real estate. The rise of REITs and real estate crowdfunding has made it possible for you to become a real estate investor without being a real estate owner yourself. All you have to do is expand your thinking and open yourself up to the possibilities.
Is $1,000 worth investing?
Absolutely yes! A number of investment opportunities are available for you to take advantage of — even if you only have $1,000 to start. You can put $1,000 into a REIT or a real estate crowdfunding platform and begin growing your wealth. You can also form a partnership with a few like-minded people and come up with enough money for the down payment on an investment property.
In either case, if you don’t invest the $1,000, you can’t grow it. What’s worse, if you don’t invest it, you’re more than likely to spend it on an impulse purchase like a new flatscreen TV, clothes or golf clubs that will depreciate 30% to 50% the minute you buy them. So, when you look at it from that perspective, $1,000 is absolutely worth investing!
What is the most profitable way to invest in real estate?
There is no one correct answer to this question. That’s because there are so many ways to invest in real estate and generate healthy profits for yourself.
You can buy into a REIT that invests in buildings or mortgages secured by buildings. You can buy properties yourself and flip them at a profit, or you can rent them out for residual income. Home flipping can potentially turn you the highest profits in the shortest period of time, but it usually requires access to large amounts of capital and/or hard-money lending.
That means elevated risk, which is the case with all investments. As a general rule, the profit potential of an investment goes up at a rate directly proportionate to the level of risk involved.
Can anyone invest in real estate?
Anyone can invest in real estate, but you should have some money, access to credit, and a working knowledege of the market to be the most successful.
Accelerate Your Wealth
Arrived Homes allows retail investors to buy shares of individual rental properties for as little as $100. Arrived Homes acquires properties in some of the fastest-growing rental markets in the country, then sells shares to individual investors who simply collect passive income while waiting for the property to appreciate in value over 5 to 7 years. When the time is right, Arrived Homes sells the property so investors can cash in on the equity they've gained over time. Offerings are available to non-accredited investors. Sign up for an account on Arrived Homes to browse available properties and add real estate to your portfolio today.
About Eric McConnell
Eric McConnell is a real estate writer with a years-long passion for the real estate industry and the desire to help everyday people learn more about real estate investing. He is a graduate of Pepperdine University, where he earned a BA in journalism.
After graduating, Eric embarked on a career in real estate where he spent over a decade as an agent for multi-family and commercial properties in Los Angeles. In his career, he’s worked on almost every side of a real estate transaction. He has represented buyers, sellers, property owners and renters and served as manager for commercial and residential properties.
In 2019, Eric started sharing his experience with the wider world as a writer. He got his start writing and editing real estate lessons for prospective licensees before joining Benzinga in 2021. Since then he has written a variety of real estate material ranging from investment platform reviews to covering and analyzing breaking news in the real estate industry. His work has been published by Yahoo News on numerous occasions.