How to Start Investing in Real Estate With Little Money

1. “House Hacking”

While not for everyone, house hacking can be a great way to get started. With this strategy, you:

  1. Buy a multi-family investment property and live in one of the units as your primary residence.
  2. Then you rent out the other units and cover your mortgage and property expenses on the entire property with rental income from the other tenants.
  3. With the money you’re not spending on rent, you can save up for a down payment for your next investment property.

Because you’re purchasing the property and using it as your primary residence, you can likely qualify for an FHA loan and put down just 3.5% to finance your house hack strategy. Whether you qualify for the FHA loan depends on the number of units (most lenders limit residential funding to four units or less) and other factors specific to your income, credit qualifications, and the property’s features and location.

With very little money out of pocket, you can purchase an investment property and house hack it as your primary residence. Ideally, you want to make sure the total rental income is high enough to cover all ownership expenses, including an allowance for vacancy, taxes and insurance.


11. Borrow Your Down Payment (CAREFULLY!)

This is one of those strategies I considered not including in the list because I’m not a big fan of borrowing money for down payments. The interest you must pay on these borrowed funds usually creates negative cash flow from the very beginning.

BUT if you do it carefully and pay the funds off quickly, it could be a way to help you get started.

For example, if you have a home equity line of credit (aka HELOC), you could borrow money on the equity of your home for a down payment or for the entire purchase of the investment property. You could then work on paying the funds back quickly from savings and/or income from the property.

Or another example, you may be able to borrow up to $50,000 from your own 401k funds. You will have to pay yourself interest AND you will have to pay the money back in a reasonable period of time. But paying yourself interest is better than paying a bank!

I shared an example of a student of mine who used borrowed 401k funds to get started with one of his first multi-unit purchases.

13 Smart Ways to Invest in Real Estate With Little (Or No) Money

With the significant investment required to buy real estate, you might wonder how to invest in real estate with little money.

Here are 13 great ways to get started on your venture into the real estate market and commercial real estate.

Crowdfunding and Investment Apps

Crowdfunding and investment apps don't require a significant investment. You invest in commercial real estate through real estate companies or real estate investment trusts with other investors. You need little money to get started, and the fund managers pool your funds with funds from other investors to buy rental real estate and/or fund the mortgages needed by builders and developers.

Common examples of real estate crowdfunding apps include:

  • Concreit – You can invest in commercial real estate for as little as $1
  • Fundrise – Investors can invest in real estate with just $10, but you'll tie up your funds for five years
  • Groundfloor – You can invest in short term real estate loans with terms of 6 – 12 months


REITs are a popular way to invest in real estate without buying physical properties. REITs are owned by real estate companies that sell shares of the companies to individual investors. When you invest in a REIT, you buy a fraction of all the trust's real estate assets. Real estate crowdfunding is a great way to get your foot in the door in real estate investing without risking too much capital. Instead, you earn passive income from the rent earned from commercial real estate or the interest earned from mortgage payments.


A Master Lease Option is a complicated real estate investment strategy, but it requires little upfront. Rather than buying an investment property, you lease it from the property owner. As part of the Master Lease Option, though, you run the building and can sublet the units, collecting rental income while paying the property taxes and insurance.

You can use the rental income earned to save for the down payment to buy the property from the owner too.

Live-in, Then Rent

Owner-occupied properties make excellent investment properties after a few years. This is the way many real estate investors start investing. When you buy an owner-occupied property, borrowing money to buy the property is a lot easier.

The lender requirements are much more relaxed, including lower down payment requirements and more flexible credit score requirements. As a result, you can get by with little money down and still get competitive interest rates.

Once you are ready to rent the home out, you can keep the same financing but collect monthly rent from your tenants, using it to cover your mortgage payments so you can qualify for a mortgage on your next home. You can find renters yourself or use a real estate agent to help you find the right tenants for your home.

Live-in House Flips

If you don't mind living in a house that's being completely renovated, you can get financing to buy a fixer-upper house and renovate it. Then, if you have the capital upfront to cover the renovation costs, you can save on interest by not borrowing the funds.

Once you fix the home up, you increase its property value and earn the difference as profit. Even if you finance the property, there aren't specific requirements regarding owning real estate and how long you must keep it.

House Hacking

House hacking is one of the most overlooked real estate investment opportunities for the everyday investor. Because banks can be difficult with their underwriting requirements for an investment property, you can use the house hacking trick to get owner-occupied financing and still invest.

When you house hack, you purchase a multi-unit property, such as a 3 unit building. You live in one unit to make it owner-occupied. You then rent out the other units, collecting the rental income and using it to pay down your mortgage and the other costs to own the property.

Purchase Money Mortgage/Seller Financing

You can be a real estate investor without buying multiple properties and running them. Sometimes real estate investments come in the form of interest, as is the case for seller financing.

Buyers who can't qualify for a mortgage may come to you for their mortgage needs. Instead of the buyer paying you the total amount of the contracted price for the home, they pay you a down payment and sign a mortgage agreement that ensures they will make monthly payments to you at the agreed-upon interest rates.

You collect monthly payments, including interest, which is your return. Seller financing usually lasts for a couple of years. During that time, the buyer works on their qualifying factors, including the borrower's credit score, debt-to-income ratio, income stability, and employment, to qualify for a traditional mortgage to pay you off in full.

Investing in Real Estate Through Lease Option

A lease option is a real estate investment that allows you to pay for the property monthly instead of coming up with a large down payment upfront. Technically, you don't own the property when you sign the lease, but you pay more than the market rent for the area as a part of the agreement.

The extra money you pay over the rent goes toward the down payment to buy the home. The agreement also includes the agreed-upon sales price and the date you must execute your option to buy the home.

Hard Money Lenders

If you're having trouble coming up with the money for real estate investing, you can try hard money lenders. These non-traditional lenders are good for borrowers that don't qualify for traditional financing, which is common when you're trying to buy a rental property or any other type of real estate investment.

Be careful, though. Hard money lenders charge high-interest rates and fees that could make it unaffordable to invest in real estate. The good news is, though, they are willing to take more chances allowing you to invest in real estate with little or no money.


If you need money for a down payment for real estate investing, microloans may be an option. As the name suggests, these loans are much smaller and have shorter terms. You can borrow money for purchasing real estate without getting in over your head with a 30-year loan.

Microloans are meant for small businesses, so if you run a real estate investing business, you might qualify for this type of funding that helps you grow your real estate portfolio.

Home Equity Loans

If you own a primary residence and have equity in it, you can leverage the equity to buy an investment property. Lenders don't ask how you're using the money you withdraw – it's your money to use, and as long as you leave 20% of your home's equity in the home, you can use your home equity line to fund the down payment on another property.

Home equity loans or lines of credit usually have flexible qualifying requirements and low-interest rates, making it an affordable way to buy a real estate investment.

Look Into Partnerships

If you don't have a lot of money to invest in real estate, you can bring a partner into the business transaction to fund it. An equity partner is someone that brings the money to the table needed to buy the property. Each partnership has its own rules and regulations. It's best to work with an attorney to work out the contract between parties to ensure both parties understand how you'll handle cash flow, property management, and capital gains.

Wholesale Properties

Wholesalers are the people who post those 'we buy houses for cash' signs on the side of the road. Here's a secret – they don't actually buy the houses. They just find the properties, negotiate a cash deal and then find sellers to buy the house for cash plus the fee you, the wholesaler, charges as a finder's fee.

Before entering these agreements, you need solid knowledge of the real estate market, property values, renovation costs, and what rehabbers want. It's a lot of legwork, but it's a great way to buy real estate with little or no money.

USDA Loans

If you're buying a property to live in, you can get into one with no money down using USDA financing. There's a catch, though.

You must buy a property in a rural area; you must be a low-income borrower, and you must not qualify for any other financing. USDA loans do charge mortgage insurance both upfront and annually, which you'll pay with your mortgage payment, but it offers a great way to invest in real estate with little money out of pocket.

2. Real Estate Investment Groups (REIGs)

Real estate investment groups (REIGs) are ideal for people who want to own rental real estate without the hassles of running it. Investing in REIGs requires a capital cushion and access to financing.

REIGs are like small mutual funds that invest in rental properties. In a typical real estate investment group, a company buys or builds a set of apartment blocks or condos, then allows investors to purchase them through the company, thereby joining the group.

A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all of the units, handling maintenance, advertising vacancies, and interviewing tenants. In exchange for conducting these management tasks, the company takes a percentage of the monthly rent.

A standard real estate investment group lease is in the investor’s name, and all of the units pool a portion of the rent to guard against occasional vacancies. To this end, you’ll receive some income even if your unit is empty. As long as the vacancy rate for the pooled units doesn’t spike too high, there should be enough to cover costs.

Pros More hands-off than owning rentals Provides income and appreciation Cons Vacancy risks Fees similar to those associated with mutual funds Susceptible to unscrupulous managers

Understand The Risks Of Real Estate Investing

You have to understand the risks before making the investment. One of the key risks involved is buying a property and having to sell it at a significantly lower price due to market conditions or other conditions outside of your control.

Another common mistake includes the timing of purchases and sales may result in substantial losses or losing out in a deal or the market picking up ahead of your prediction forcing you to buy the same product that was available for a bargain at a premium.

If you’re owning the rental, maintenance and other large expenses can also be a challenge.

3. Live-in House Flips

If you’re the handy type and don’t mind living in a construction zone, you can purchase a fixer-upper. You move in, make repairs and improvements, and sell the home for top dollar.

This strategy does require money: you’ll need a down payment and renovation funds. But since you’re living in the home, you’re “investing” what you would spend on rent to build equity in the property. Your hard work can build up a lot of sweat equity.

Of course, you also need skills to do some of the renovation yourself (or you’ll pay too much). You should also educate yourself about the market to ensure that the updates and improvements you make will pay off. The idea is to improve the house to sell, not put in top-of-the-line upgrades that appeal to you personally. With this in mind, you set yourself up to pull the maximum amount of equity out when you sell your property.

Five steps for getting started as a real estate investor

Instead of sharing the fruits of their labor, many investors today prefer to keep the income and tax benefits of directly owning real estate all to themselves.

Here’s how to get started as a real estate investor:

1. Determine your investment strategy

Real estate investment strategies fall into three general categories: 

  • Active: Hands-on real estate investing includes fixing-and-flipping, wholesaling to other investors, finding and managing rental properties yourself, and working as a licensed real estate agent to earn commissions while you build up your investment portfolio.
  • Mostly passive: Investing for recurring cash-flow streams and long-term property appreciation includes partnering with other investors, or purchasing professionally managed rental properties from Roofstock. There is some work involved but the day-to-day management can be handled by a property manager. 
  • Passive: This includes buying shares through crowdfunding and REITs, of a property or property portfolio, that are fully managed.

2. Become an expert in your field

The best way to learn about something is by doing it. However, it’s important to understand exactly what it is you’re doing and why.

The most successful real estate investors are always learning. Real estate courses can be taken online from sites like Udemy and REI, while Roofstock Academy offers a comprehensive educational program for serious investors ready to take their investing to the next level. 

3. Understand the market

In order to really know whether you’re getting a good deal, it’s critical to thoroughly understand the ins and outs of the local market you’re investing in.

Important things to consider include:

  • Fair market property values and whether they are trending up or down.
  • Market rents to know what the true income potential of a property is, and if it will be cash-flow positive.
  • Don’t overpay, because money is made in real estate when the property is bought, not when it’s sold.

4. Have access to plenty of working capital

Renowned real estate investors like Sam Zell and Roger Staubach don’t need to look for capital because people are literally lined up to do deals with them. 

Until you’re ready to join the ranks of the ultra-wealthy, it’s important to make sure you have access to plenty of capital. That’s because investing in real estate sometimes requires more cash than expected. 

Plan on putting at least 20% down for a rental property, set up a separate capital reserve account for repairs and maintenance, and factor in the loss of cash flow created by vacancies and the time it takes to turn a tenant.

5. Learn the local real estate rules and laws

When you’re renting real estate to the general public, the odds are that sooner or later a legal situation will arise. Investors can avoid potential problems and litigation by understanding the local and state laws that govern real estate:

  • Eviction processes vary from place to place and may limit your rights as a landlord.
  • Conducting background checks on potential tenants helps avoid renting to problem tenants in the first place. However, always be sure to treat every applicant fairly and equally.
  • Rental security deposits and prepayments often have their amounts capped by local landlord tenant laws.
  • Insurance coverage for rental property differs from owner-occupied homes and should include general liability coverage that protects you against claims from the tenant or the tenant’s guests.

8 Different Ways to Invest in Real Estate

Let’s dig into eight different ways you can become a real estate investor.

Buy and Hold

“Buy and Hold” is the classic way to invest in real estate. You buy a property, and you hold it for the foreseeable future, renting or leasing it out to generate income.

This buy-and-hold model accounts for six out of our eight ways to invest in real estate. But each of these six gets a unique spin, as you’ll see…

1. Single Family Homes

Investing in a single-family rental property (home or condo) is a great starting point for anyone who wants to be a real estate investor. You simply buy a property and find a good tenant. Nothing to it!

The benefits of buying and holding single family homes The upfront investment may take a little saving, but it’s manageable. Income is relatively passive once your tenants get moved in. You can potentially renew one lease for years if you have good tenants. The only real work required is to handle a couple of routine maintenance calls per year.

The challenges of buying and holding single family homes If you only own one property, and your tenants move out, you don’t have any income to cover the monthly costs of ownership until you get new tenants moved in. There is always some risk that your tenants may miss payments, skip out on the lease, or damage the property. The security deposit offers some protection, and (worst case scenario) you always have the option to sue the tenant for monetary and property damages if necessary.

How to get started in single family home investing 1. Talk to a lender about your financing options so you’ll know how much money you’ll need to invest out-of-pocket. 1. When you have the money, go back to your lender to get pre-approved for a loan. This will show sellers that you’re a serious buyer and will give your offer more weight. 1. Start shopping for properties that can earn enough in rent to more-than-cover your mortgage, insurance, taxes, and maintenance. 1. Buy your investment property and find yourself some good tenants.

2. Vacation Rentals

If your investment property is in a prime travel spot, you might want to consider making it a shorter-term vacation rental. It’s like being a mini-hotelier.

Think Airbnb. You furnish the property, down to the utensils, linens, and even toiletries. You rent out the space for as little as one night at a time (but often for weeks or even a couple months). And you, or your property manager, provide your guests with a unique place to stay while they’re traveling.

The benefits of buying and holding vacation rentals You can charge a higher nightly rate on vacation rentals than on long-term rentals. You’ll be able to use the property yourself as a vacation home when it’s not rented out.

The challenges of buying and holding vacation rentals You either need to be actively involved in managing reservations and check-ins/check-outs or hire a property manager to handle it. You’ll typically see more wear-and-tear from short-stay guests than long-term tenants.

How to get started in vacation rental investing 1. Start the same way you would with a single family home. 1. Once you’ve purchased the property, furnish and decorate it to match your target market’s expectations. 1. List the rental on sites like Airbnb, who can handle reservations, payments, and reviews for you for a small commission.

3. Multi-family Residential

Multi-family residential could be a 2-unit duplex, a 400-unit luxury apartment complex, or anything in between.

It’s not much different from owning a single-family rental property. You simply have more units to manage.

The benefits of buying and holding multi-family residential You could live in one of the units yourself. This is an amazing opportunity to have the rent from the other units cover the cost of your unit. You’ll essentially be able to live rent-free for as long as you like. You’d also be able to keep an eye on the building living onsite. Multiple tenants mean instant diversification. If one tenant moves out, you still have the other units offsetting your costs until you can get a new tenant moved in.

The challenges of buying and holding multi-family residential The upfront investment is typically higher because the cost of a multi-family property is typically higher than a single-family property. More tenants mean more time spent managing them. Or you could hire a property manager to manage them for you.

How to get started in multi-family investing The process to get started is the same as with a single family home, but instead of finding one good tenant, you’ll find a good tenant for each unit.

4. Commercial

Now we’re venturing into real estate investments most people never even consider. But you should!

Commercial real estate is a broad category covering properties like: Retail storefronts, Shopping centers, Restaurants, and Office buildings

Instead of renting to individuals (as is almost always the case with residential property), you typically rent commercial property to companies, large and small. Commercial investing is a slightly more sophisticated method of buy-and-hold investing.

The benefits of buying and holding commercial property Leases are usually long. Often a 3-year minimum, and as long as 30-years in some cases. If your commercial property has multiple units, you benefit from that instant income diversification.

The challenges of buying and holding commercial property May require a substantial initial investment. Commercial spaces can sit vacant for months, waiting for the right tenant.

How to get started in commercial investing The specifics vary greatly depending on the type of commercial property you’re looking to buy. But the basic starting structure is the same: get approved for the loan, close the deal, find tenants.

5. Industrial

Like commercial property investing, industrial property investing covers a number of property types. Industrial property types you might consider investing in are: Warehouses, Industrial office space, Manufacturing space, or Self-storage

Industrial investments are generally low-maintenance. There is more emphasis on functionality and less emphasis on high-maintenance aesthetics.

The benefits of buying and holding industrial property The leases are generally long and the income is steady. Industrial properties typically require little maintenance.

The challenges of buying and holding industrial property May require a substantial initial investment. Most industrial spaces are single-tenant, so having the tenant vacate could leave you without investment income while you find the next tenant. And it can be even more difficult finding tenants for industrial spaces than for commercial spaces.

How to get started in industrial investing Again, the specifics vary depending on the type of property you buy. But the basic starting structure remains: get approved for the loan, close the deal, find tenants.

6. Vacant Land

Vacant land is only as valuable as what can be done with it. Purchasing acres and acres in Middle-of-Nowhere, Wyoming won’t do you much good. But purchasing some land outside of rapidly expanding metro areas like Austin, TX could pay off big in the long-term.

The tried-and-true method for making money in vacant land is to buy where you expect people to expand, and sell to developers once the expansion reaches your land.

You can potentially make money during the waiting period by erecting billboards and selling ad space if the land is located along a well-traveled road.

If the land is fertile, you could lease the land to local farmers.

The benefits of buying and holding land The initial investment may be small, and the potential return on investment is incredible when you can buy acres for pennies and sell them for thousands. In many cases, there is zero maintenance required.

The challenges of buying and holding land If there is nothing on the land, there’s nothing producing an ongoing cash flow. Land isn’t quite as interesting as some of the other real estate investment opportunities.

How to get started in land investing Find some vacant land with potential and buy it. Now you’re a real estate investor!

Buy and Flip

All the property classes we just covered as buy-and-hold options can also be bought with the intention of flipping them. You buy the property, improve it, and sell it within a matter of weeks or months.

7. Buy and flip any property type

You should give flipping some thought before you jump in. Improving the property with a two-month renovation will naturally increase the resale value, but will it increase the resale value enough for you to recoup all your costs of materials and labor plus your closing costs and your mortgage, tax, and insurance costs during the few months you own the property? And still turn a profit large enough to make the project worth the effort?

And are you sure you’ll be able to sell immediately? Having a flip sit on the market for months while you make the mortgage payments is not a position any flipper wants to be in.

The trick to flipping is timing the market. This is best done in a super-hot market where property values are increasing by the day. You want the property to grow in value during the short period in which you own the property, even without your improvements. That’s how you can be confident that you’ll be able to sell for more than the purchase price plus expenses.

The benefits of buying and flipping There’s something inherently satisfying about taking a property from nothing to something special. Flipping has the potential to make you a substantial profit in a short period of time.

The challenges of buying and flipping You’ll either be doing all the work yourself or relying on contractors to complete the work on time and on budget. Flipping is riskier than buying and holding because if you get the timing of the market wrong, you could lose money on the deal.

How to start buying and flipping 1. Do your market research. Short-term market trends are crucial to success and failure in flipping. Make sure you know exactly what your market is doing, and you are confident that values will continue to climb for the time it will take you to buy, renovate, and sell a property. 1. Do your construction research. Know where you can get supplies, how much the flip will cost, and how long it will take. 1. Factor closing costs (on both the purchase and sale of the property) into your potential profit calculations. 1. See if an experienced flipper would be willing to partner with you on a deal. In exchange for showing you the ropes, they get a share in the profit.


A common excuse for not investing in real estate is the initial down payment required to purchase a property. That down payment is a sound investment, but it’s also a lot of money to most people.

Well, you can’t use that as an excuse any longer. Because we live in the age of crowdfunding!

8. Crowdfunding

Crowdfunding allows you to pool your initial investment with other investors. Everyone puts their money into the deal and becomes a part-owner in the real estate project. This could be a buy-and-hold property, a flip, or even a fancy development project.

This isn’t a new idea. “Real Estate Investment Groups” have been around forever as a way to help investors with little capital get started in real estate investing. But today’s crowdfunding systems make the process easier than ever.

Today’s systems allow people from all over the world to pool small amounts of money to invest in a property together. And you don’t have to be an accredited investor to participate as you did in the traditional real estate investment groups. Crowdfunding is normal people, like you, sharing in the risk and the reward of real estate investing.

The benefits of crowdfunding You can become a real estate investor today, with as little as $500. You don’t have to deal with any maintenance or tenant issues.

The challenges of crowdfunding You don’t have as much control as you do when you own the property alone. If the project is a flip or a development, you have to really trust the project’s managing team since individual investors are not likely to have any say in how the project is managed.

How to start crowdfunding 1. Check out real estate crowdfunding sites like RealtyMogul, iFunding, or Fundrise. 1. Get familiar with the types of deals available to investors and read the fine print to make sure you understand the terms of your investment. 1. Create your account, pick your project, and send in your money. 1. Congratulate yourself on becoming a real estate investor, and wait for your payday!

Your Turn To Get Started!

Are you ready to start investing in real estate, even if you have little or no money? I hope you’ve found the ideas in this article helpful.

I got started investing in real estate investing with very little money. And I remember how challenging it was.

Your own journey probably won’t be easy either. But if you apply your favorite ideas from this article and combine them with persistence, energy, and a lot of hustle – it IS possible to make real estate investing work for you too!

Best of luck in your real estate investing journey!

Which of these ways to start with little or no money makes the most sense for you? I’d love to hear from you in the comments below.