How to Invest $30K in Real Estate

Interested in investing in real estate? Learn the best way to invest $30k in today's market.

HoneyBricks Team
Updated
August 11, 2022
|
4
min read
by

HoneyBricks is on a mission to unlock the potential of real estate investing. We are rebuilding the real estate investment experience, making buying, earning income, and selling income-producing real estate instant, low cost, and enjoyable.

You've saved $30,000, and now you want to allocate your funds to something that will help you conserve and grow your wealth.

Stocks, bonds, and cryptocurrencies are all potential investment options - but as an asset class that offers an effective inflation hedge and financial security, real estate comes in at the top of the list.

Investing in real estate with $30k is not only possible, but can be highly profitable. There are so many ways to allocate funds within real estate, how do you know what option is best for you?

This article will explore everything you need to know about how to invest $30k in real estate, including the most used and successful investing strategies.

In this article:

A simplified guide on how to invest $30K in real estate

If you want to invest $30k in real estate, consider your opportunities and potential constraints first.

You probably won't have a chance to purchase a mansion or beachfront condo for this level of investment, let alone cover the down payment. However, there are still a number of effective ways to get started in real estate including:

  • Buying and owning investment properties directly
  • Real estate investment trusts (REITs)
  • Online platforms and crowdfunding

Once you decide where to invest your money, the next step is to conduct your due diligence. Projecting cash flows, analyzing financial statements/portfolios, and researching property markets may be necessary, depending on the type of investment.

Before choosing where to invest $30k, consider setting aside a portion of your investment capital. Unexpected expenses like broken appliances or water leaks are an unfortunate reality of real estate investing. Cash reserves will enable you to address these issues timely.

The benefits of investing $30k in the real estate market

The benefits of real estate investments depend on your choice of rental property and strategy - however generally offer three things:

  • Cash flow: Real estate has proven its ability to offer steady and predictable income streams.
  • Stability: People always need places to live, which makes real estate investment properties very stable assets.
  • Diversification: With a low correlation to other asset classes like stocks and bonds, real estate provides diversification within a traditional investment portfolio.

How much return does a $30K investment yield?

As with any investment, returns are never guaranteed. However, to help visualize what a $30K return could look like, we estimated the value of a $30,000 investment in a few popular asset classes over a 5-year hold period.

We used the following return assumptions for each asset above:

  • Real Estate: 1.8X Equity Multiple
  • S&P 500: 10% average annual return
  • Bonds: 6% average annual return
  • Cash: 3.8% average annual inflation

As you can see, holding cash actually reduces in value over time as inflation takes hold. In periods of higher inflation, such as in our current environment, this effect would be even more pronounced.

Real Estate, on the other hand generated the highest return on investment.

Ultimately, a portfolio diversified across a number of different assets and industries is better suited to hedge against inflation and other potential risks.

Learn more: Diversifying Your Crypto Portfolio

A strong inflation hedge

With US inflation at the highest rate in 40 years, anyone paying attention is probably worried about the future value of their investment portfolio.

People always need places to live - which drives strong underlying demand for housing.  But what is it that sets real estate apart as such an effective hedge against inflation rate?

  1. Tenant turnover provides frequent opportunities to begin tenant leases and pass higher costs to the tenant with market-adjusted rates
  2. The underlaying market value of the land and materials increases, which makes them more expensive to replace

According to Zillow, the typical observed market rate for rent has increased 16.8% in the past year and 31.5% in the past 5 years.

Types of investments

If you want to allocate your funds properly and see the results quickly, consider the types of real estate investments within your budget. When evaluating different types of investments, it's important to keep your investment objective in mind. What is your primary investment goal?

  • Generate passive income
  • Reinvest cash to build wealth
  • Diversify wealth from the stock market and crypto investing

The answers to these questions will help you decide on the types of investments. Your investment strategy could include everything from physical rental properties and REIT shares to tokenized real estate investing.

Let's briefly explore the key investments you can make with $30k:

Investing in tokenized real estate with cryptocurrency

Recent advancements with blockchain technology have led to the tokenization of real estate. Tokens are digital representations of ownership in physical real estate. They are the easiest way to invest in real estate, especially if you already have a crypto wallet.

Tokenized real estate allows you to receive income, grow your capital, and borrow from your assets. To invest in these digital assets, create an account on a platform like HoneyBricks.

The HoneyBricks marketplace lists current token offerings that can be purchased using fiat, crypto, or staked crypto. Once you've purchased your tokens, you can hold them to:

  • Receive rental income paid in crypto
  • Pledge as collateral and draw down liquidity
  • Redeem/sell them (after an initial holding period of 6 to 12 months required under securities law)

Start investing: Want to try your hand at becoming a real estate investor? Create a HoneyBricks account today and explore available investment offers.

Understand and diversify your risk

When considering where to invest $30k, understanding your risk tolerance is very important.

Every investment comes with some degree of uncertainty. Matching your risk tolerance with the appropriate asset or type of investment is the best strategy for successful investing.

For example, cryptocurrencies can provide a high rate of return but are also very risky and volatile. On the other hand, a successful buy-and-hold property investment that generates positive cash flow requires thorough due diligence and property analysis. These skills take practice to master, and a mistake can be costly.

To mitigate and diversify these investment risks, consider passive investing with expert managers with the right incentive structures. Tokenized real estate is a great way to manage the risks associated with other investments without sacrificing returns.

Is investing $30k in real estate the right choice for you?

Deciding what to do with $30k is not easy. There are many different ways to invest your money, each with advantages and disadvantages.

If you decide that real estate is the best way to invest 30k, HoneyBricks can help you get started. HoneyBricks tokenizes high-quality, multifamily US real estate assets. To learn more, check out HoneyBricks' real estate strategy.

About the Author

HoneyBricks Team

HoneyBricks is a technology platform that connects investors with high-quality commercial real estate opportunities through asset-backed security tokens.

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Invest in real estate from your crypto wallet

HoneyBricks wraps high quality, US real estate into security tokens that allow you to receive passive income, capital growth, and borrow from your assets.

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