How To Invest In Real Estate With Little Money | 2023

how to invest in real estate with little money

Investing in real estate has historically been the most reliable way to build a consistent stream of passive income. However, contrary to popular notion, you can invest and start earning almost right away – without having piles of money stashed away or notching up an eye-watering credit score. However, you’ll have to learn how to get into real estate using tested and proven ploys. Here’s how to invest in real estate with little money.

You can invest in real estate with little money by borrowing from banks or non-traditional lenders and selling it later for a profit. You can also make money in real estate by investing in REITs or mutual funds or by partnering with other investors. This isn’t as complicated as it may sound and is worth exploring further.  It’s not always easy to qualify for loans from traditional financial institutions. Fortunately, there are several ways to secure financing if you want to buy a property but don’t have the financial muscle. This article will explain everything you need to know on how to invest in real estate with little money.

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1. Buy Property And Sell It Later For A Profit

This is a very common real estate investment strategy. It’s called the buy-and-hold approach. It involves buying a piece of property at a low price and holding on to it for more than ten years, before selling it for a hefty profit. 

Real estate value increases every year (hopefully) and you can make a fortune if you hold onto your property long enough. However, the secret to success is finding a cheap property that can appreciate.

Here are some tips on how to find a property for cheap:

  • Pore over MLS listings. Usually, the longer a property has remained unsold, the lower the price the seller is willing to accept. Check the CDOM (continuous days on the market) or PMP (property marketing period) numbers to determine how long the property has been on the market.
  • Check out foreclosures. Banks want to offload their inventories of foreclosed houses. Quickly! Check with the banks in your city or district.
  • Explore short sales. You can find lucrative deals if you have the time to wait for the bank holding the lien to approve the sale. These houses are usually habitable because the owners still live in them. 
  • Consider fixer-uppers. A house that needs $10,000 worth of repairs might sell for $30,000 less than a similar property ready for moving in. Buying a fixer-upper entails some DIY repair work on your part. If you’re up for the challenge, you can bag a lucrative deal.
  • Search for properties in neighboring towns and cities. A house situated just half an hour outside your city might be priced tens of thousands of dollars less than a similar house within city limits. You can find lucrative deals in cities that were hit hard during the economic downturn of 2008.

2. Rent Out Properties You Own

To get maximum ROI on your property, rent it out during the holding period to long-term tenants. You can earn a lot of money even before you sell the house. 

For example, you can become a host on Airbnb and rent your house to tourists and travellers for short periods. If you live in an area that’s a popular vacation spot, you can earn more from vacation rentals than traditional rentals. Much more!

Be sure to check your local jurisdiction regulations on Airbnb hosting and vacation rentals first.

3. Seek Financing From the Sellers

If you can’t obtain a property loan from financial institutions, you can go in for a purchase money mortgage or seller financing agreement. Here are the steps on how the deal works:

  1. The property seller agrees to pay the closing costs to finalize the deal. 
  2. You then sign an agreement with the seller that states an interest rate and a mutually agreed-upon repayment schedule. 
  3. You start repaying in monthly instalments. 

The advantage of seller financing agreements is that you can negotiate a lower down payment than what you could’ve when dealing with a bank. This is especially true if the house needs repairs.

4. Seek Hard Money Loans

Obtaining a loan from a traditional financial institution can be a hassle and a significant barrier to real estate investing. Especially when you’re looking to invest in real estate with little money. 

Enter hard money lenders.

Hard money lenders are professionals or companies that advance money specifically for investing in real estate. Their approval criteria aren’t as stringent as those of banks, and you receive the money quickly after being approved. 

You’ll have to bear the costs associated with purchasing the property, such as appraisal fees, application fees, and closing costs.

These lenders charge 10%–18% interest on the loans, and the terms are usually for 12 months or less. These loans are ideal for remodeling projects, such as repairing a fixer-upper that you can then rent out or sell to earn a profit.


5. Apply for a Microloan

Microloans are advanced to small businesses and start-ups to help them grow. If you have a small real estate business, you can avail of these loans to buy a cheap property or repair a fixer-upper before renting it out or selling it.

As the name suggests, microloans are smaller than those that banks usually offer. So, the approval criteria are less stringent than those of traditional financial institutions. 

6. Form Partnerships With People Who Have Money

A sneaky tactic perhaps, but when done correctly – one that can be mutually beneficial. 

Real estate partnerships bring together a person who has a knack for sniffing out lucrative investment properties for sale with an investor who has the money and the credit score to make the purchase.

If you want to get into real estate investing with next to no money, ally with an equity partner who’ll finance the purchase of a high-priced property. Ensure that you agree on the following: 

  1. Individual roles
  2. Goals of the partnerships
  3. Amount of risk you’re willing to undertake
  4. Percentage of profits to be shared

7. Secure a Home Equity Loan

You can capitalize on the equity of your primary residence and use it to finance the purchase of a new property. Banks and other financial institutions offer products like Home Equity Line-of-Credit and Home Equity Installment Loans to help you capitalize on the equity that you have built and let you borrow against it. You can use the loan as a down payment or pay the total purchase price. 

8. Trade Your Old House for a New Property

You can trade a house you own for a new property. This strategy helps you acquire new property while avoiding the capital gains associated with selling your old home. 

You can swap houses with homeowners looking to downgrade or upgrade their living quarters. Remember to factor in the locations of the properties in question too.

9. Consider House Hacking

With house hacking, you can live in your own house for FREE! 

A Federal Housing Administration (FHA) loan is an owner-occupant financing program. The property that’s financed must be the primary residence of the owner. According to FHA’s rules, you have to move into the house within 60 days of closing on the deal and live in it for most of the calendar year for at least the first year. 

Here’s how the “hack” works:

  • You buy a duplex or a triplex
  • You move and live in one unit
  • You rent out the other units
  • You can utilize the rental payment to pay for your expenses

10. Apply for a USDA Loan

The U.S. Department of Agriculture (USDA) aims to revitalize under-populated areas with a population of 10,000 or less. With this goal in mind, the department’s Rural Development office offers loans with down payments as low as 0% in underpopulated rural and suburban areas. 

The USDA loans are for people in low and moderate-income brackets who don’t qualify for loans from traditional financial institutions. 

11. Apply for an SBA Loan

The U.S. Small Business Administration’s (SBA) 504 Loan Program gives small business owners long-term, fixed-rate loans to buy commercial real estate. The interest rates match favorable bond market rates. 

SBA loans require only a 10% down payment, and loan amounts can range from $125,000 to $20 million. You can use this loan for the following purposes:

  • To purchase land and owner-occupied buildings.
  • To construct new buildings.
  • To renovate, modernize, or repurpose existing buildings.

You can roll soft expenses like architectural and legal fees, appraisals, environmental audits, interest and fees on construction financing into the loan.

12. Invest Through Various Lease Options

You don’t have to buy a house to earn money from real estate investment. You can rent a property and obtain permission from the owner to sub-lease extra bedrooms or an unutilized unit of the house. This is the master leasing option.  

For instance, you rent a three-bedroom condo for $1,600 a month. You then sub-let each of the two bedrooms for $600 per month. You thus earn $1,200 from subletting. So, you have to pay only $400 as rent for the condo.

But there’s another lease option. The property owner or the seller charges you higher rental payments. The excess rent is funnelled towards the house’s selling price, and you can eventually purchase it. 

The advantage of this leasing option is that you don’t have to shell out the purchase price at once. You make only a slightly higher rental payment every month. 

13. Invest in REITs

A real estate investment trust (REIT) is a company or a trust that owns or operates income-generating properties. The majority (75%) of the investment is in real estate. A REIT can focus on residential or commercial property.

Owning shares in REITs is like owning stocks. You receive a portion of the profit made by the REIT as dividends. 

You can learn more about REIT investing in our article: REITs vs Real Estate Investing: Whats The Difference?

The following are the advantages of investing in REITs as part of your real estate investment strategy:

  • It’s an option that requires the least amount of initial capital. You can start investing by buying only a single share.
  • You don’t have to buy real estate.
  • You don’t have to be a landlord and go through the hassles of screening tenants and managing properties.
  • You can earn high dividends because REITs are required by law to pay out at least 90% of their taxable income to shareholders.
  • REIT shares are like liquid stocks and mutual funds. You can sell these quickly to raise cash. 
  • There are several publicly-traded REITs that new investors can purchase through brokerage firms.

14. Invest in Real Estate Mutual Funds

Real estate mutual funds are more liquid than REIT shares. These mutual funds may invest in REITs, publicly-traded shares of home builders, companies that sell construction supplies, and other kinds of real estate operating companies. 

Investing in real estate mutual funds allows you to invest in diversified assets. You also have the flexibility to switch between funds.

This is great way to dip your toes in the water and invest in real estate with little money up front. 

15. Consider Real Estate Wholesaling

Real estate wholesaling involves entering into an agreement with a distressed seller wherein you find a buyer for their properties and forge a sale for a profit. Here are a few advantages of this strategy:

  • You don’t need to own a property to earn money.
  • You don’t have to invest any money to earn returns.
  • You don’t have to repair a house to sell it.
  • It’s a no-risk strategy to make money from real estate.

However, your success with wholesaling real estate depends solely on finding sellers who would be willing to sell below the market price for you to earn a profit from the sale.

16. Go In for Real Estate Crowdfunding

In real estate crowdfunding, you get together with other investors to pool your money to finance real estate projects. This pooled money can be invested in rental properties like large multi-unit houses or advanced as hard money loans to experienced property developers. 

Here’s how real estate crowdfunding works:

An experienced real estate developer wants to buy an apartment complex priced at $4 million. The building needs $2 million worth of repairs. He hopes to sell the renovated building at $10 million after a few years.

The developer can borrow $4 million from the bank and contribute $1 million for repairs. He still has to arrange $1 million more to cover the expenses for repairs. This is where crowdfunding comes in.

The developer lists his project on a crowdfunding platform to raise $1 million. The investors who pool money into his project earn a share of the profits when the renovated building is sold.

How to Get Into Real Estate

Getting into real estate is not just about how much money you have in your kitty. You need to weigh in on the following considerations before deciding how you want to invest:

  • Are you willing to be a landlord?
  • Are you willing to cut costs and put other projects on the back burner to spare the money to make the down payment on a new property?
  • If you borrow from the bank, are you willing to commit to sticking to the repayment schedule?
  • If you cannot secure a loan from a bank or a traditional financial institution, can you pay the high interest rates that non-traditional lenders levy on their loans?
  • Do you have the risk appetite to go in for speculative investment in the real estate market?



There are many ways to invest in real estate. You can make money on the house you already own, by renting it out, or sell as an investment, or to buy something else that suits your need even better.

You don’t even need to own property to get into real estate investing. You can use other people’s money to enter into the world of real estate investment. Other than traditional financial institutions, many lenders will loan you money without fulfilling stringent qualifying criteria.

The answers to the questions above will determine which road to investment suits you best. The key to starting your real estate investment journey is just to get started!

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