How to Invest 100k in Real Estate

Real estate lets investors manage risk by diversifying their portfolios, provides opportunities for both reliable income and price appreciation and has special tax advantages as well. An investor with $100,000 to get started in real estate investing can choose between active and passive investments and commercial or residential assets. Opportunities range from acquiring a second home for part-time rental to joining other investors via a crowdfunding site.

Are you looking for professional guidance on investing? Consider speaking with a financial advisor today.

Real Estate Investing Basics

Real estate represents trillions of dollars in global investments. While this can dwarf the combined value of stocks, bonds, commodities and other assets traded on world markets, inflation and rising interest rates since 2020 have also changed real estate, both elevating industry costs and even causing home values to drop.

Nevertheless, there is still plenty of room in this diverse landscape for investors who have as little as $100,000 to invest. And there are many ways to invest, even when starting with limited funds. An investor can be active, buying and managing individual properties, or passive, which generally means purchasing shares of publicly traded companies that invest in real estate.

Investors can also get into residential properties like single-family homes or duplexes, or commercial properties such as offices, warehouses and retail spaces. One of the first moves recommended for beginning real estate investors is assembling a team. Passive investors will generally at least consult with a financial advisor to help develop an overall investment strategy.

An active investor who wants to buy and manage properties may add a real estate broker specializing in residential or commercial properties, an accountant knowledgeable about the tax ramifications of real estate investing, bankers, property managers, remodeling experts and others. With the team in hand, the investor is ready to start considering where and how to invest.

6 Ways to Invest $100,000 in Real Estate

There are numerous ways to invest $100,000, even just in the real estate realm. Here are six common real estate opportunities worth researching for a $100,000 investment:

1. Buy a Second Home

SmartAsset: How to Invest $100k in Real Estate

Purchasing a second home is one way to get started as a real estate investor. These are easy to finance and can generate income by being rented out for part of the year. They also have the potential for price appreciation and can give investors lots of leverage. A 20% down payment of $100,000 allows an investor to control a home worth $500,000.

A single-family rental home is one step up in complexity. Because down payment requirements may be higher for properties bought purely for investment, the same $100,000 may be able to purchase a home worth approximately $333,000, assuming a 30% down payment. If the investor wants to manage the property, he or she will have to deal with repairs, rent collection and occasionally difficult tenants. Hiring a property manager to handle these details will reduce the net income, but also the hassles.

2. Flip a House

Another common investment strategy is house flipping, which involves purchasing a single-family home that needs some repair or renovation, spending the money to prepare it for sale, and then selling it rather than keeping it to collect rent.

The key here is to find a motivated seller willing to sell at an attractive price. After that, it’s important to be able to accurately estimate the cost to complete needed work and a realistic selling price for the improved property.

3. Buy Commercial Property

Commercial properties, which include apartment complexes, office buildings, warehouses and shopping centers, can also generate steady rent but are often more expensive than single-family homes. Investors with limited funds can, however, join other investors to acquire commercial properties.

Part owners are entitled to a proportional share of the rental income and any gains when the property is sold. Commercial real estate brokers can guide investors to opportunities to participate in joint ventures to acquire commercial properties.

4. Invest in REITS

Real estate investment trusts (REITs) offer many advantages for beginning and veteran real estate investors. These publicly traded companies invest in real estate and distribute income from rent or property sales to shareholders. REITs come in many different varieties, providing high levels of diversification, and investing a lot or a little in one is as easy as buying shares of any public company.

5. Buy Mutual Funds and ETFs

Real estate-focused mutual funds and exchange-traded funds may be the easiest way of all to start investing in real estate. These funds invest primarily in REITs as well as real estate operating companies. They are highly diversified and cost-effective and shares can be bought and sold online with the click of a button.

6. Crowdfund With Other Investors

Crowdfunding is yet another way to begin investing in real estate. Here, investors pool their funds with others, generally facilitated by an online platform, to purchase specific properties. Crowdfunding investors receive benefits, such as cash flow from rent or gains if the property is sold, in proportion to the size of their investment. Some real estate crowdfunding platforms have minimums as low as $500, but others are for investors of more means.

Knowing where to best spend your investment money takes expertise and guidance. You might want to consult with a financial advisor to help you make the right decision.

Tips for Investing in Real Estate

Investing in real estate can be a powerful way to build wealth and generate passive income. Whether you’re looking to diversify your portfolio or create a sustainable revenue stream, knowing how to invest $100k in real estate requires understanding key strategies and approaches. Here are essential tips to guide your real estate investment journey:

Start with thorough market research: Before committing your capital, analyze local market trends and property values. Understanding neighborhood growth patterns, rental demand, and future development plans can help you identify areas with the best potential for appreciation and consistent returns.

Consider different investment strategies: Real estate offers multiple pathways for investors. Traditional rental properties provide steady income, while fix-and-flip projects can yield quicker returns.

Calculate all costs beyond purchase price: Successful real estate investing requires accounting for property taxes, insurance, maintenance, property management fees and potential vacancies. Creating a comprehensive financial model that includes these expenses will give you a realistic picture of your investment’s profitability.

Build a reliable professional network: Connect with real estate agents, property managers, contractors, and fellow investors. These relationships can provide valuable insights, help you find off-market deals, and ensure your properties are well-maintained and profitable over time.

When considering how to invest $100k in real estate, remember that patience and due diligence are your greatest allies. Start with smaller investments if you’re new to the field, continuously educate yourself about market trends, and be prepared to adapt your strategy as conditions change. With careful planning and the right approach, real estate can become a cornerstone of your investment portfolio.

Bottom Line

Real estate represents a huge investment opportunity that welcomes investors with as little as $100,000. This amount will let an investor purchase a single property for rent or resale. Crowdfunding or joint ventures enable smaller investors to buy more costly commercial or residential properties. Publicly traded REITs and mutual funds are perhaps the easiest, most liquid and most diversified ways to enter real estate investing.

Investment Tips

A financial advisor can help you build an investment plan that fits within your larger financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Building a diversified portfolio is important regardless of what type of investing you are interested in. Use SmartAsset’s asset allocation calculator to get started.