invest with 10k

Think you need to be rich to invest in real estate or stocks and start building passive income streams?

Think again.

You can do a lot with a $10,000 investment, especially if you know how to combine it with other financing. Beyond real estate investments for $10K, we’ll also break down some easy ways to invest $10K in paper assets like stocks and bonds, particularly in tax-sheltered retirement accounts.

Try the following ideas to invest with $10K, or even less.

 

Best Real Estate Investments for $10K

While it’s harder than investing $10,000 in stocks, you still have plenty of options for real estate investments with $10K.

Just take care not to over-leverage or overextend yourself. You need an emergency fund as a property owner, because “unexpected” expenses like repairs, maintenance, and vacancy rates can strike at any time.

 

Buy a Home by House Hacking

If you’re new to real estate investing, house hacking is one of the easiest ways to start.

Hell, even if you’re an old pro, everyone could stand to ditch their housing payment, right?

House hacking involves using your home to generate income, which offsets your housing costs such as your rent or mortgage payment. In the classic model, you buy a small multifamily property such as a duplex or triplex, move into one unit, and rent out the others. You can take out a conventional mortgage for properties with up to four units. After living in the property for at least one year, you can move out and repeat the process, keeping your old home as a straight investment property.

But that’s not the only way to house hack. Other house hacking ideas include renting out rooms to housemates, renting out an accessory dwelling unit (ADU), renting out part of your home on Airbnb, or renting out storage space. You can also rent out your entire home on Airbnb when you’re not using it.

With a traditional mortgage loan, you can put down as little as 0% with VA loans or USDA loans, 3% on Fannie Mae loans, or 3.5% on FHA loans. Combine that with a seller concession to cover closing costs and $10,000 might cover your down payment.

 

Real Estate Syndications

While unfamiliar to most middle-class Americans, real estate syndications offer high returns without any of the headaches of landlording.

You invest passively as a “limited partner,” buying fractional ownership in a commercial property such as an apartment complex. As a fractional owner, you enjoy full tax benefits including real estate depreciation, and all property deductions come off of your taxable income.

Annual returns typically range from 12–50% or higher, but there are a few catches. First, many real estate syndications are only available to accredited investors. But even syndications that allow non-accredited investors still require $25–100K as a minimum investment.

“Whoa there — I only have $10,000 to invest, remember?”

The good news is that there’s a loophole in these private equity investments. You can pool funds with other investors to invest as a single entity. That’s exactly what we do in our Co-Investing Club, which gets  together once a month to collectively vet and invest in real estate deals.

 

Real Estate Crowdfunding

If you’re not quite ready for real estate syndications yet, consider real estate crowdfunding as a baby step. You can get your feet wet in real estate investing with as little as $10.

Like syndications, real estate crowdfunding lets you passively buy fractional ownership in properties, or portfolios of properties. Alternatively, some let you invest in loans secured by real estate.

For instance, Fundrise owns a mix of apartment buildings, single-family rental properties, and loans secured by properties. Streitwise owns a portfolio of commercial office buildings. Groundfloor and Concreit own short-term hard money loans secured by real estate. Arrived Homes lets you buy fractional shares of rental properties with as little as $100.

On the plus side, it’s easy to vet real estate crowdfunding platforms, since there are only a handful of big-name platforms and you can find plenty of independent reviews online. Even better, you can spread your $10,000 among many of these investment vehicles for easy diversification.

Just don’t expect returns as high as real estate syndications.

 

Rental Properties

“Don’t I need more than $10,000 for a down payment on a rental property?”

In most cases, yes. But sometimes you can get creative to come up with a down payment on a rental property.

For example, you can borrow some or all of the down payment from unsecured business credit lines. Yes, as a real estate investor, you qualify to open business credit lines and cards. Check out Fund&Grow as a business credit service that helps you open $100–250K in unsecured credit as a real estate investor.

You can also tap into HELOCs and other equity sources to help cover some of the down payment.

It’s entirely possible to buy a rental property with $10,000 but it does take some creativity on your part.

 

BRRRR Method

Expanding on that point, the BRRRR method of real estate investing lets you take it a step further and repeatedly invest with the same down payment.

The acronym stands for buy, renovate, rent, refinance, and repeat. The core premise: you pull your down payment back out of the property when you refinance. You can do that because lenders base the refinance amount on the after-repair value of the property, not the original purchase price.

So, if you can invest $10,000 in one rental property, you can theoretically pull it back out and invest it in another. With each property, you add passive income streams, making it easier to keep saving more money to invest with.

 

Publicly Traded REITs

Blurring the line between real estate investments and paper assets, you can also buy shares in publicly traded real estate investment trusts (REITs).

These real estate-oriented companies trade on public stock exchanges, so you can buy and sell shares at any time. By law, they must pass at least 90% of profits back to investors in the form of dividends.

On the plus side, you can invest for as little as a single share price, making it easy to diversify and spread your money around. And the liquidity makes it easy to invest without worrying about locking your money up for years on end.

But that liquidity comes with a downside: volatility. Share prices bounce around just like stock prices do. Indeed, REITs correlate uncomfortably closely with financial markets, which largely defeats the purpose of diversifying into real estate in the first place.

What the #%& are real estate syndications, and do they really earn 15-50% returns?

Best Paper Asset Investments for $10K

Real estate is far from your only option among investments for $10K. In fact, it’s easier to invest in paper assets like stocks and bonds.

Consider the following as you explore how to invest $10,000 for a roaring rate of return. 

 

Employer Match on Retirement Accounts

If your employer offers to match your contributions to a 401(k) or other workplace retirement account, take them up on it. You get an instant 100% return on your investment, before even earning a cent of normal returns or tax benefits.

Think of it as free money that you leave on the table by not maxing it out.

 

IRA Contributions

When you contribute to a traditional IRA, you can write it off as a tax deduction. That means you earn a return equivalent to your tax rate in the first year, due to your tax savings.

However, if you’re younger, consider investing in a Roth IRA instead. Your money compounds tax-free, and you pay no taxes on either contributions or returns in retirement.

But what do you invest in once you contribute money to a traditional or Roth IRA?

 

Stock Index Funds

Consider investing in index funds that simply mirror major stock indexes such as the S&P 500 or Russell 2000. These funds come with low expense ratios (fees) and give you broad exposure to the stock market.

While you can technically invest in index mutual funds, most index funds are exchange-traded funds (ETFs). Don’t get bogged down in the technicalities, just look for reputable funds with low fees.

You can even automate your fund investments with a robo-advisor. Some robo-advisors are even free — I use Charles Schwab, which is free but requires a minimum investment of $5,000. It takes all investment decisions out of your hands, which prevents emotions from ruining your returns. But not all robo-advisors are created equal, so do your homework before choosing a brokerage firm.

 

I-Bonds

During periods of high inflation, one guaranteed way to hedge against inflation is to buy Series I bonds.

These U.S. government bonds pay interest over and above the rate of inflation, and are of course fully backed by Uncle Sam. The interest rate adjusts every six months.

There are two caveats, however. First, you can only invest up to $10,000 per year, per adult. Second, you have to hold them for at least five years in order to avoid an early withdrawal penalty. You can’t sell them at all within the first year.

And let’s be honest — inflation is rarely a problem in the U.S. Still, when it rears its ugly head (like it is in 2021–2023), I-bonds offer great protection with guaranteed returns.

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What short-term fix-and-flip loan options are available nowadays?

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We compare several buy-and-rehab lenders and several long-term landlord loans on LTV, interest rates, closing costs, income requirements and more.

How Not to Invest with $10K

If you’re new to investing, avoid high-risk speculations like cryptocurrency. Sure, a handful of people made a fortune in gambling on them — and for every one of those, ten other people lost money. 

Likewise, avoid picking individual stocks. You’re not an expert stock investor, or else you wouldn’t be reading this article. Stick with a diversified portfolio of stocks as a simple investment strategy that always wins long-term, and leave single stock picking to pros and traders. 

On the other end of the spectrum, you probably want to avoid overly defensive assets like precious metals and commodities. As a novice (and presumably younger) investor, you should also steer clear of fixed-income investment options like bonds. Leave bonds for retirees and older adults approaching retirement, and leave gold and silver to wealthy speculators and hedge funds.

And no, savings accounts and money market accounts don’t count as investing at all. Those savings vehicles work great for your emergency fund, but they deliver negligible rates of return. 

 

What’s the Best Way to Invest $10,000?

Whether you plan on investing $10K in real estate, stocks, bonds, or other assets, you have plenty of options on the table. 

For that matter, if you still have any high-interest debt, knock it out before investing. Paying off debts such as credit card debt delivers a return equal to the interest rate, making it the ultimate safe investment. 

Most of all, just get started building your investment portfolio. Whether you end up investing $10,000 in real estate, stocks, or other asset classes entirely, focus more on learning what you need to know to succeed in the long run. 

Happy investing!

 

What’s your plan to invest with $10K? What $10K investments appeal to you the most?

 

 

More Personal Finance Tips:

About the Author

G. Brian Davis is a landlord, real estate investor, and co-founder of SparkRental. His mission: to help 5,000 people reach financial independence by replacing their 9-5 jobs with rental income. If you want to be one of them, join Brian & Deni for a free class on how to earn 15-50% returns on passive real estate syndications.

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