The Best Way to Invest 25k
by Christopher Levarek
“To accomplish great things, we must dream as well as act.”
- Anatole France
For many investors, myself included, saving up capital to invest takes time and effort. For those in the early 30s, this can mean putting aside money and forgoing trips to restaurants, hotels, countries, etc. This saved capital, earned from hard working hours at a W-2, is precious. It also might not be in vast amounts as the investing journey starts for a 35 year old busy professional with a growing family. So what does one do with it?
Let’s imagine that the saved hard-earned capital is around $25,000. Well of course one could put it into a retirement plan but most career busy professionals are already contributing to some kind of 401k or IRA prior to receiving the paycheck. One could invest it into random stocks or crypto currency that catch interest or even simply put it into a “high-interest” savings account. Perhaps even invest into a growing business or idea of a family member or friend.
What about real estate? Another option might be investing into real estate. Yet, as many might ask, how can $25k make any kind of investment into real estate? Isn’t more money needed in today’s market?
Let’s check out how someone can take $25k and own real estate property as an investment.
Best way to Invest $25k
Why Real Estate?
Sometimes it helps starting with Why. So let’s discuss why real estate. As a long time contributor to a 401k and stocks, I am someone who liked to set it and forget it. I invested in index funds and hoped for the best as I worked my daily busy W-2 job. This is a common approach for many. It was only around my mid 30’s I saw the benefits of real estate investing and how they simply out measure almost every other investment.
In general, this has to do with real estate having not only income or return benefits like a stock might, but others as well. Mainly I refer to the tax benefits, equity growth and appreciation that come with a real estate investment. In fact, #1 reason people invest in real estate besides generating passive income, is the tax benefits. Being able to receive a paper loss, depreciation from real estate property, against other income can make the investment returns even that much stronger.
The other benefits of real estate include having tenants pay down your loan or mortgage and natural/forced appreciation of the value on the property both which allow your equity in the property to grow. In other words, as the value increases or appreciates, the difference between what you owe and what it’s worth grows. In addition, as the loan is paid down, the difference between what you owe and what you paid for it, grows.
If you want to read more in detail on the five benefits or real estate, you can read our previous article on why real estate is the IDEAL investment. Yet, as you can see, I like real estate simply because it competes at levels where other investments can’t. Most other investments simply offer a return on capital. Real Estate is different.
Where or How to invest $25k?
Ok but where does anyone invest $25k into real estate? Doesn’t someone need $100k or $200k or more to buy real estate property?
I asked these same questions in the beginning. However, I learned in time that one doesn’t have to be a millionaire or billionaire to own real estate. All you need is some initial capital, partnership and the desire to learn. You see real estate has many varying options for investment and there is no one way fits all!
Let’s look at 5 ways to invest $25k in real estate.
Invest $25k with other like-minded investors into a real estate syndication (I do this)
Invest $25k with another real estate investor, partner or partners to buy real estate property.
Invest $25k into a property in a market out of state with a lower purchase price at $100-$125k …(I did this)
Invest $25k into any priced property with negotiation, example = seller carryback financing
Invest $25k in a 3% down primary residence you rent = househack
The options listed above may seem strange or even scary but I assure you many continue to use such strategies to grow and protect their wealth through real estate. Number 1 and 2 could be considered more passive investing while numbers 3-5 would be more active investing or require more time commitment.
And this is just the tip of the iceberg, there are so many various methods for investing into real estate. Let’s look at 5 other bonus methods for investing $25k into real estate :
Invest $25k into a 2nd home(to be a rental) using a vacation home loan, only 10% down for these loan types!
Invest $25k along with capital borrowed from a hard money lender or private lender to perform a BRRRR, in which capital is returned 6-12 months later but the real estate property is owned by you…(I did this)
Invest $25k into a primary residence home as a live-in flip for again 3% down, whereby you improve the house while living there and then sell the home.
Invest $25k into a REIT, a publicly traded stock only invested into real estate projects.
Invest $25k as a private lender to another real estate investor for an interest rate and return.
In Final
So what is the best way to invest $25k? Well, firstly, invest in real estate. But “the best way” is based on the investor and their own goals. I have personally utilized almost all the above methods and know that anyone can take part in some or all the benefits of real estate investing.
This is why we started Valkere Investment Group. We wanted to make real estate investing simple for the busy professional. Easy to understand and easy to access. We do this through real estate syndication.
If you want to talk through what options you might have or discuss investing goals, sign up for the Valkere Investor Club (it’s free!) to speak with a member of our team. We can provide guidance, opportunities or even help you decide which method above best suits your lifestyle or goals.
Happy Investing!