How to Invest in Real Estate With $5k, CEO Shares 5 Markets to Watch
- Jilliene Helman is the CEO of the real estate investment and crowdfunding platform RealtyMogul.
- Helman introduces five high-growth markets and two contrary tips to watch out for in the face of high inflation.
- It also explains why real estate investors shouldn’t play with the money at the table.
With U.S. inflation hitting nearly 40-year highs, properties that have historically been viewed as a hedge against high inflation are once again number one for investors.
But it has always preoccupied Jilliene Helman. As the child of parents and grandparents who worked in various sub-sectors of the real estate industry, she grew up talking about real estate values at the dining table. Later, when Helman worked in the wealth management industry, she couldn’t help but notice the overarching theme that all of her wealthiest clients were real estate investors.
“Either they made their living with real estate or they kept their money and avoided things like inflation with real estate,” said Helman, CEO of RealtyMogul, in an interview. “And it was really this insight that made me quit my job and become an entrepreneur.”
Today, RealtyMogul, a real estate investment and crowdfunding platform, is being used by investors to put over $ 800 million in capital into over $ 4 billion in real estate transactions, the company said.
Why and How to Start with $ 5,000
The digital platform essentially offers investors two options for accessing real estate transactions: (1) investing in specific properties such as apartments, office buildings, shopping malls, industrial self-storage or even real estate development businesses; (2) Get exposure to the company’s diversified real estate pool through its two public, unlisted real estate investment trusts.
Due to its legal structure, the company’s individual real estate investment opportunities are limited to accredited investors raising a minimum of between $ 25,000 and $ 35,000. Its housing growth
and Income REITs are open to all investors with a minimum requirement of $ 5,000.
The $ 5,000 minimum for REITs is on the higher end of the spectrum among similar real estate investment platforms. Fundrise enables investors, for example, to purchase real estate shares for as little as 10 US dollars in order to attract younger first-time investors who are interested in stable, long-term investments.
From Helman’s point of view, the higher requirement is to illustrate her investment philosophy that real estate investments are long-term investments that can often be illiquid and risky in the short term.
“We don’t want people to invest with table money,” she said. “For investors who don’t have $ 5,000 to invest, they are unlikely to be the right investors to invest in an entirely illiquid asset class.”
5 markets that could see double-digit growth in 2022
Extremely low interest rates and the pandemic move away from crowded cities have fueled a glowing housing market where prices have soared with low inventory levels.
With three rate hikes this year to contain inflation, U.S. mortgage rates have soared to their highest level since March 2020. The average interest rate on a 30 year loan was 3.45%, down from 3.22% a week ago.
Real estate experts, including Ivy Zelman, who dubbed the housing bubble in the 2000s, have warned that the market is fragile and prices could fall earlier than expected.
Although there are risks and uncertainties, Helman believes that “not all markets are the same” and that “supply and demand in all markets are also not the same”. For the coming year, she looks to high-growth markets in which the combination of strong demand, low supply and rapid job creation could lead to double-digit growth.
To take Austin, Texas, for example. Companies from Tesla to Google are on a hiring frenzy there for high earners who earn between $ 200,000 and $ 1 million a year. With a limited supply of apartments and high demand, significant price increases for single-family, multi-family and commercial properties are inevitable, Helman said.
San Diego is another market on their list. The city, which has a tight 3% vacancy rate, is seeing a sharp surge in venture capital investments in life sciences. It is building a life sciences center through the IQHQ development project, which aims to build the largest urban commercial waterfront along the California coast.
Helman likes too Miami and Tampa, Florida, both of which have created growing numbers of jobs in technology and finance. She is keeping an eye on Water Street Tampa, a $ 3.5 billion development project co-funded by billionaire Bill Gates and Tampa Bay Lightning owner Jeff Vinik.
Nashville is also on their radar because of its $ 84 billion-a-year health economy and relative affordability, Helman said.
“When we think about the new trends in home working, I think technology markets that are affordable for technicians who are not geographically restricted are very attractive,” she said. “So we’re excited about Nashville.”
In addition to high-growth markets, Helman is counting on the comeback of New York City and the San Francisco Bay Area. Despite the brain drain from the two cities in the age of the pandemic, the impact of the existing technology and financial footprint in these two regions should not be underestimated, she said.
For example, Google said in September that it plans to buy a $ 2.1 billion office building in New York, although many of its employees still work remotely. Meanwhile, the biggest tech companies from Meta and Twitter to Apple and Airbnb remain in Silicon Valley.
“New York is just so established, and the Bay Area is similar,” she said. “We anticipate that over time they will recover to pre-pandemic levels and beyond. It will take time, but we don’t think these markets need to be written off.”