It’s never too early, or too late, to begin investing in real estate, even if you only have a few hundred dollars to start with. From direct ownership to partnerships, REITs, crowdfunds, and more, there are lots of ways to get started in your real estate investing journey today. There’s something out there for everyone looking to get in on a great investment opportunity.
You might be wondering how much money is needed to invest in real estate & we can help. Let’s dive in on why real estate can be a great investment for those seeking passive income, explore how to use other people’s money (OPM) to maximize your returns, and answer the age old question “How much money do you need to invest in real estate?”. You might be surprised by what we’ll uncover!
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How Much Money Is Needed To Invest In Real Estate
The answer is simple, but it all depends.
Leverage is a great way to access larger returns.
This real estate principle allows investors to use a small amount of money to receive a much bigger return. Leverage may otherwise be known as financing, or using other people’s money for your purchase.
When you think about it, real estate is the only asset where you can make a minimum down payment, finance the remaining purchase price, and own and control an asset that generates monthly cash flow and appreciates in value over the long term.
Cash-on-cash return
In order to understand the power of leverage, it’s important to know how cash-on-cash return works. Cash-on-cash is a percentage that compares the amount of money you invest in an asset to the amount of money you receive:
- Cash-on-cash return = Annual net cash flow / Total cash investment
Generally speaking, the higher the cash-on-cash return is the more profitable the investment is, because you are receiving more net cash flow compared to the amount of cash invested.
Diversification
Real estate is a great market, but there are other ways to achieve your income goals. Income funds are one example and they provide monthly income and appreciation to help you reach your goals.
Want to know more about real estate investing or diversification? Saint Investments is here to help! Our seasoned experts are veterans in the financial services world and will help you achieve your goals.
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President of Saint Investment Group
Nic is a two decade seasoned expert in investing and capital raising, specializing in Real Estate and debt markets. With Saint Investment Group, he leads large-scale distressed asset purchases and innovative syndications for investors.
