How to Invest in Real Estate With Little Money

Published on
April 10, 2022
Invest in Real Estate with Little Money

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Did you know real estate investing is possible with little or no money invested? It sounds crazy, but there are many ways to jump into the real estate market without a large amount of capital. You don't have to be an accredited investor or have a lot of money to say that you, too, own real estate.

From investing in real estate mutual funds to buying physical real estate, real estate values continually increase, making real estate investing a great way to diversify your portfolio and potentially make money.

Why Invest in Real Estate

There are many reasons to consider real estate investing, but the most common reasons are the potential for dividend income, aka cash flow, equity build-up, and long-term capital appreciation. In addition, real estate is historically a hedge against inflation and usually corrects itself even after a financial crisis.

Real estate investors enjoy monthly dividends from rental income on rental properties, and they can even leverage the equity in the property to invest in more real estate. Real estate investing also helps diversify your portfolio, so you aren't relying solely on the stock market and its performance.

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Investing in Real Estate Pros

Real Estate Is Often a Hedge Against Inflation

Real estate typically appreciates at a pace faster than inflation. Even if you buy undervalued property, fix it up and sell it, you stand the chance to make a decent profit between the equity build-up and capital appreciation.

You Might Get Tax Benefits

A direct real estate investment offers tax benefits because you can operate it as a business, not just a straightforward investment like you would if you invested in the stock market. You may be able to write off certain expenses, including the property's depreciation costs, when you own rental properties.

Real Estate Often Pays Dividends

Depending on the real estate investment, you might earn dividends in rental income or mortgage interest depending on whether you invest in the property's equity or debt. You can withdraw dividends or reinvest them to compound your earnings.

You Can Build Equity

Real estate investing requires a specific strategy, and when done right, you can build equity in the properties you own. If they are rental properties, your tenants pay the bills for you while you earn the return on your investment. How much equity you earn depends on the property's market value when buying and selling the property. Equity is the difference between the two and can be a great way to help you start investing.

You Can Hire a Property Management Company to Handle the Property

If you don't have the time or knowledge to manage physical real estate, you can hire a company to handle the property management for you. While this decreases your profits, it can help make investing in real estate more feasible.

Investing in Real Estate Cons

Real Estate Investing Requires a Lot of Upfront Money

Owning real estate requires ad lot of capital. Even if you're able to secure a loan, mortgage lenders usually have stricter requirements for purchasing a home that isn't your primary residence, especially if you use it as an investment property to earn passive income.

Being a Landlord Can Be a Lot of Work

When you own real estate, you are the landlord, aka the person in charge of everything to do with the property. You'll generate rental income, but you are on call 24/7 if something is wrong with the property. You are also responsible for the property taxes, homeowner's insurance, and the overall safety and sanitation of the property.

Real Estate Isn't Liquid

When you invest in real estate, you tie your money up for a while. It's not easy to sell a property fast, so make sure you aren't investing funds that you can't be without for some time. If you secure financing to help with the purchase price, you're still investing your down payment which can be tied up for some time.

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.

How to Invest in Real Estate With Little Money FAQ

Is Investing in Real Estate Profitable?

Any investment can be risky. Whether you're investing in physical real estate or real estate investment trusts, there is always a risk of loss. Historically, real estate has a good track record, but that doesn't mean every one of the real estate investments you make will be profitable. So there's always a need to diversify and plan for the risk of a loss.

What Is the Least Amount of Money Needed to Invest in Real Estate?

You can get some real estate investments for no money down or sometimes as little as $1 invested. For example, you can find a real estate investment trust with a minimum investment of as little as $10, or buy physical real estate with a USDA loan with no money down.

Can I Lose Money on Real Estate Investments?

There's always the chance of losing money on any investment, including real estate investments. Whether you're investing in REITs as mutual funds, directly in a real estate investment trust, or buying income-producing properties, there is always the risk of default, the property losing value, or your initial investment.

The Bottom Line

It's possible to invest in real estate with little or no money. You just have to think outside the box and see what other opportunities are available to you. Accredited investors aren't the only people that can invest in real estate and enjoy its lucrative returns. Take a look at our website to get started investing today!


This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security which can only be made through official documents such as a private placement memorandum or a prospectus. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Neither Concreit nor any of its affiliates provides tax advice or investment recommendations and do not represent in any manner that the outcomes described herein or on the Site will result in any particular investment or tax consequence.Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Concreit does not guarantee its accuracy.

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