How to Invest in Real Estate with Little to No Money

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Contributor, Benzinga
March 23, 2024

How to invest in real estate with little money? The answer to this question may seem daunting, but with the right knowledge and strategies, it is possible to get started in the real estate market without a hefty initial investment.

By exploring strategies such as wholesaling and creative financing options, investors can enter the real estate market with minimal upfront costs. It’s important to conduct thorough research, network with industry professionals, and be willing to think outside the box to maximize your success in real estate investing with limited funds.

Steps for Investing in Real Estate with Little Capital

Follow the steps outlined below to get started investing in real estate.

Option 1: Real Estate Crowdfunding

Who said you have to come up with all the money for a property on your own? You can crowdfund real estate with other like-minded people just like you crowdfund any other product. On some platforms, you can get in for as little as $500. The real advantage here is the ability to diversify into real estate with the same amount of money that would normally buy one property.

Instead of leveraging yourself to the hilt and worrying about your credit score, the $10,000 you might have used for a down payment puts you in 10 properties. There are pitfalls to avoid. Read the terms of service for a crowdfunding scheme to ensure the following:

  • You can get your money out when you want it.
  • The fund manager isn’t charging exorbitant fees that you pay for.
  • A timeline for payback or interest exists.
  • The fund posts a set and transparent interest rate or equity stake.

Depending on the platform you choose, you can self-direct your investments or rely on a team to place your money for you. The herd mentality may not pay off here. With small amounts of money, you will likely not be doing business with accredited investors. Conduct your own due diligence on a property before investing in it.

Best Real Estate Crowdfunding Platforms

Take a look at these real estate crowdfunding platforms. Their services differ based on how much money you have and the kind of service you want (hands-on versus a more passive-agent approach).

Option 2: REITs

One of the best passive real estate investment opportunities is the real estate investment trust (REIT). The REIT manages, owns or finances real properties that generate income. Think of the REIT as the mutual fund of real estate with many similarities to the crowdfunding model.

Like crowdfunding, the REIT pools investor capital. Unlike crowdfunding, REITs may be publicly traded. They also have a wider spectrum of investments and may include data centers, warehouses, medical offices, retail locations and cell towers, along with traditional apartment buildings.

Mortgage REITs do not take ownership of real estate, although they do finance it. The income from REITs is made up of the interest on the investments. REITs also have to meet certain requirements to qualify for the distinction:

  • Be a taxable corporation
  • Derive 75% or more of its gross income from sales, rents or interest on mortgages
  • Payout 90% of its taxable income annually in shareholder dividends
  • Build at least 100 shareholders in 365 days
  • Have less than half of its shares in the hands of five or fewer people
  • Have a board of directors or trustee management team

There are three major types of REITs:

  • Mortgage REITs facilitate mortgages to property owners or acquire mortgage-backed securities. They profit from the net interest margin.
  • Equity REITs are the default REIT type. They manage and own real estate that produces income, primarily through rents.
  • Hybrid REITs take strategies from both mortgage and equity REITs.

You can invest in REITs through the public stock market if it is public. If a REIT is private, you go through a broker with access to these exclusive markets.

Best Brokers for REITs

If you like the structure of the REIT, here are a few of the most reputable brokers in the business.

Option 3: HELOCs

A home equity line of credit (HELOC) can also be known as a second mortgage. Many individuals get started in real estate investing by taking a line of credit from their residential property after paying it off or building substantial equity in it.

A HELOC is a revolving line of credit and usually has lower interest rates than many other common types of loans. You may also be able to deduct the interest you pay on a HELOC loan from your taxes.

Your interest is low because you are borrowing against the equity that is already in the home you own. The home is collateral, and the available credit in a HELOC is replenished instantly right after you pay it. You have the freedom to borrow as much or as little as you wish with no prepayment penalties. There is usually a draw period of some years when you don’t have to pay anything back until the repayment period begins.

Your credit limit on a HELOC is usually around 85% of the equity you have in your home. Although the loan is secured through your home, your lender may look at your credit score to set your interest rate. The default interest rate on a HELOC is variable, but you may also be able to qualify for a fixed-rate loan.

Best Lenders for HELOCs

You are already in the driver’s seat if you have equity in your home. Build your wealth with the right HELOC partner. Look for low-interest rates and good service.

  • Figure HELOC
    securely through Figure HELOC's website

    * Our APRs can be as low as 3.00% for the most qualified applicants and will be higher for other applicants, depending on credit profile and the state where the property is located. For example, for a borrower with a CLTV of 45% and a credit score of 800 who is eligible for and chooses to pay a 4.99% origination fee in exchange for a reduced APR, a five-year Figure Home Equity Line with an initial draw amount of $50,000 would have a fixed annual percentage rate (APR) of 3.00%. The total loan amount would be $52,495. Alternatively, a borrower with the same credit profile who pays a 3% origination fee would have an APR of 4.00% and a total loan amount of $51,500. Your actual rate will depend on many factors such as your credit, combined loan to value ratio, loan term, occupancy status, and whether you are eligible for and choose to pay an origination fee in exchange for a lower rate. Payment of origination fees in exchange for a reduced APR is not available in all states. In addition to paying the origination fee in exchange for a reduced rate, the advertised rates include a combined discount of 0.50% for opting into a credit union membership (0.25%) and enrolling in autopay (0.25%). APRs for home equity lines of credit do not include costs other than interest. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone.

Investing in Real Estate Without Money

Don’t slow down your investing journey just because your cash pile isn’t where you think it should be. Innovative technology and new processes mean fresh opportunities. Use the financial vehicles above as templates to explore the world of alternative investments — investments that can keep your money working for you no matter how much you have.

Frequently Asked Questions


What does it mean to buy rental property with no money down?

Buying rental property with no money down means acquiring a property without making a down payment or providing upfront cash. This involves using creative financing strategies to cover the purchase price. It allows individuals to enter the real estate market and generate rental income without saving a large amount of money. However, it is important to consider the risks and challenges involved.

Should you invest in real estate?

Investing in real estate requires considering factors such as financial situation, risk tolerance and long-term goals. It can be profitable with passive income, appreciation and tax benefits but also comes with risks like market fluctuations and property management challenges. Thorough research, understanding the market, assessing financial capabilities and seeking professional advice are important before making investment decisions.

Can I lose money on real estate investments?


Investing in real estate can result in financial losses due to various risks such as declining property value, unexpected expenses, difficulty finding tenants or buyers and changes in the real estate market. Poor decision-making and market fluctuations can also contribute to losses, so thorough research and risk assessment are crucial before investing.

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