Investing 101

How To Invest In Real Estate With Little Money (Or No Money!)

How to invest in real estate with no money? We are not miracle workers so, perhaps the question is better phrased: How to invest in real estate with little money?

That being said, just because you have limited income now does not mean you should wait to start. In fact, every day that your money is not invested, you are loosing money. The best way to learn is by doing and real estate investing with little money is a perfect way to test the waters, and see just how great of a ripple effect you can create.

How to invest in real estate with little money

Investing in real estate with little money is very possible. In fact, you might be surprised at the many avenues available to you, as a beginner investor with limited funds. You do not need to be a high-net-worth individual or pension fund investing in real estate private equity (REPE) to be a real estate investor. You also do not have to be a house flipper. We are going to go over a few of these options, both passive and active, and make our case why passive investing will better serve you at this point in your real estate investing journey.

Real Estate Crowdfunding

You can invest in real estate with little money through real estate crowdfunding. Real estate crowdfunding is the mutually beneficial passive real estate investment method in which private companies can raise money to invest in residential, or more commonly, commercial real estate properties from investors willing to put down relatively small minimums.

These real estate investment opportunities were once reserved for institutions and the ultra-wealthy aka accredited investors: people that make over $200K annually and hold 1 million in assets (not including their house). The JOBS Act of 2012, made crowdfunding legal; thus, making real estate investing with no money–well very little money–legal!

So, the flood gates were open and real estate crowdfunding platforms have exploded in popularity. There are many platfroms to choose from: some raise equity investments, others debt investments, some invest in properties located in a specific region, others in specific types of commercial real estate.

Crowdfunding is an ideal avenue to start investing in real estate with little money; however, as with any investment, do your research: Who are the fund managers?–Do they have a good track record? How will the profits be split amongst the company and investors? What are the management fees? Answering these questions will allow you to make an informed decision where you are putting your money and provide you a realistic expectation on your returns.

We recommend this method for how to become a real estate investor with no money and bad credit, above all else, as these platforms are designed with small investors in mind. In the case of School of Whales, you are able to add anywhere from $10 to your investment on a monthly basis, so to create the effect of compounding returns. This means your invested capital grows by larger and larger amounts as your base keep increasing i.e. exponential growth.

So, you are able to take a small initial investment and grow this quickly without taking on the risk and requiring the expertise of owning an investment property.

How much money do I need to invest in real estate using real estate crowdfunding?

Anyone with as little as $500-$1000 (depending on the crowdfunding platform) can invest. These platfroms can raise large sums of money quickly, as many people are able to invest small amounts of money.  Investors can become shareholders in a real estate property without having to be a landlord, put a down payment, deal with lenders or invest significant capital in renovations!


A real estate investment trust or REIT is another passive form of real estate investing. A REIT is a corporation that owns and/or manages income-producing commercial real estate. Similar to crowdfunding platforms, many REITs will specialize in a specific commercial real estate type or region.

Unlike crowdfunding platforms, however, when you invest in a REIT you are purchasing shares of the company that owns and manages the commercial real estate properties. You are not purchasing ownership stake of the actual properties. So, while REITs allow you to invest in real estate with little money, it is worth noting that your returns are correlated to the returns of the stock market, given these shares can be bought and sold in real time. For this reason this is a liquid investment, which could be advantageous to a beginner investor who has limited cashflow, or simply too tempting for those who may lack self control and want to dip into their invested capital.

Legally, REITs are required to pay 90% of the profits to investors in the form of dividends; however, beware of the management fees, as these can be high in this type of real estate investing and eat into profits.

The beauty of REITS: regardless of whether their share price goes up or down, they have to legally pay their investor dividends. If you reinvest the dividends, you are able to, again, create compounding returns and grow your small initial investment quickly.

REITs viable answer to the question of how to invest in real estate with little money. We recommend this option second, as the correlation to the stock market presents more volatility than crowdfunding, but like crowdfunding you can have compounding returns that grow your money faster.

How much do I need to invest in real estate using REITs?

REITs are another viable solution to the conundrum of how to invest in real estate with no money and bad credit, as the initial investment minimum can be as low as $1,000. This is much lower than a required down payment on a house, and you have the option to liquidate if you find yourself in a tough spot.


Maybe you want get into real estate with little money and want to be more involved in the project, but don’t want to do it on your own. A real estate investment group or REIG, offers just this. This is an active form of real estate investing, although depending on the group, the extent of your responsibilities will vary.

Typically an REIG invests in multifamily commercial real estate. To become a member, the investor buys one or more units within an apartment building or condo, or the investor’s money is pooled and all the units are co-owned. The operating company manages the units and the marketing, and in exchange will take a percentage of the monthly rent. Additionally there are group fees, so you have to be cognizant of how these expenses may erode your ROI.

Usually, REIGs host regular meetings where you can build strong rapport and create an industry network of likeminded investors. For this reason REIGs are ideal for beginner investors interested in understanding how to start investing in real estate with little money, that also want to learn from seasoned real estate investors.

We recommend this option 3rd, as you do not have the same advantage of compounding returns, but it allows beginner investors to own a property or multiple properties while mitigating the risk of vacancies and expenses incurred through renovations.

How much money to invest in real estate using REIGs?

In the case that funds are pooled and units are co-owned, an investment minimum can be as little as $500-$1,000. In the case where individual investor own their respective units the starting investment will be at least $50,000.

Seller Financing

Now we are into our options of active real estate investing where you would take on the challenge of owning the property. Full discloser, we do not recommend seller financing or the following options to investors getting into real estate with no money, as owning an investment property entails inherit risk that would require someone with more financial security to be able to weather through any potential set backs.

Seller financing is a residential real estate investment strategy that in a best case scenario, is a way to get into real estate with no money….Kind of…

Keep in mind owning a property costs money whether due to necessary repairs, renovations or even the money invested in marketing to find a renter.

In the case that you would like to purchase a property, but do not qualify for a loan from a traditional lender or bank, you could seek financing from the seller. Just like a conventional mortgage, the seller would typically require a minimum down payment and then paying the remaining balance at whatever cadence and time period is agreed upon.

How much money do I need to start investing in real estate via seller financing?

Any terms can be negotiated, so it is possible to negotiate no money down. With this option, nothing is off-limits. Everything is on the table to be negotiated. Maybe you negotiate no money down with the condition that you are responsible for necessary repairs that were brought to light during inspection. But maybe those repairs end up being a money pit.

It is up to you and the buyer to set the parameters with which you are mutually comfortable. Typically a seller would require at least 5% down payment, which would still be a great deal.

BRRRR Flipping Strategy

So, we’ve all heard of flipping houses. BRRRR Flipping differs slightly, as after remodeling the property, you keep the house as a rental income property and refinance it to pull out some or all of your cash, thus recycling the funds.

In theory, the goal is to quickly increase the value of the property, beyond what is invested in renovations, and instead of selling it to pay yourself back, you refinance it and rent it out. In this way, you can access some or all of the increased value and cash out on the difference between the new and old loan. Then, you would purchase a new property, while also be receiving residual income from the original property through monthly rent.

Sounds like an ideal method of investing in real estate with little money, for those who would like to build a portfolio of properties–BUT that’s only if everything goes exactly according to plan which would likely require experience and insight from a seasoned real estate investor, as well as luck!

Full discloser we do not recommend this for beginner real estate investors, and here’s why:

Below we breakdown the potential pitfalls that could result in loosing the shirt off your back, if you already have limited income:

  • B – Buy: First you buy a property that shows potential to increase value: In a conventional deal, this would require at least 10% down on the house with significant mortgage payments. Maybe you are purchasing a diamond in the rough property for an extremely reasonable price, but this leads us to your next potential pitfall…
  • R – Remodel: Next, you  remodel the property to increase its value and make it rentable: Ok fine, but you need to be very strategic in how you remodel the property to ensure you are not investing more money than what you will be able to get in return. Many times while remodeling, you may come across a needed fix that will cost a significant amount of money: Maybe you find a mold issue once demolishing the bathroom; Maybe as your replacing the floors you find asbestos tiling (toxic building material) that would require professional removal; Maybe you’re not the first to take a shot at the reno thing and you uncover poor workmanships like questionable electric wiring or uneven carpentry that threatens the structural integrity. We could go on, but we will spare you. Our point: renovations can quickly spiral out of control and become a money pit.
  • R – Rent: After that, you rent the property to a quality tenant (or tenants), and reap the rewards of this supplemental income: That sounds great, but what if it takes time to find a quality renter, can you continue to pay the mortgage, after shelling out for the renovations?
  • R – Refinance: Then, using a long-term mortgage loan, you refinance the property: For your sake, we would hope that you did your research and invested wisely in renovations that added significant value to your investment property. So, that your new loan covers the refinancing closing costs and leaves you enough money left over.
  • R – Repeat: Lastly, if desired you can take the remaining balance, after paying off your short-term purchase financing, to purchase another property. Many stars must align for the inexperienced real estate investor in order for this end result to become reality. This would mean that you increased the value of your home to the extent that this would also cover closing costs on the new loan and still have enough for a down payment on the new property. Its risk on risk on risk…

Our conclusion, this seems like a lot of work, a lot of risk and potentially nothing to gain. You could just be making money while you sleep via a passive real estate investment strategy built around how to get into real estate with no money.

How much money do you need to invest in real estate using BRRRR Flipping Strategy?

Well, as we already touched upon, you would need enough for a down payment, renovations, mortgage payments on the home during the renovations and then anything potentially invested in marketing to find a renter–Think professional pictures, realtor commission etc.

House Hacking

House hacking is when you make your existing home a rental property. Do you have an extra bedroom, a guest house, basement or space that you could convert into living quarters by putting up a temporary wall? Then, you can rent out this space to generate income.

If not, you could move into a small multi-unit property like a duplex or triplex and rent out the extra unit(s).

While this may not present the same extent of risk as BRRRR house flipping, you still may need to invest in renovations or purchase a larger property with the hope of finding quality renters. Again, this presents another scenario of financial vulnerability–money up front with many variables at play that determine if you’re going to get an ROI.

How much money needed to invest in real estate using house hacking?

In theory the money required to get started is however much is necessary to make the existing space in your home rental ready. If you are looking to purchase a property with existing spaces ready for tenants, this can be done with minimal money down through an owner-occupant financing. An FHA loan would only require 3.5% down and conventional loans (3%-10%. down).

Can you invest in real estate with no money?

Investing in real estate with no money, is possible! Your options are more limited if you are looking at 0 upfront cost, but you do have options. While we first and foremost recommend real estate crowdfunding and/or REITs to get started in real estate with very little money–think returns from 6%-10% without exerting any effort–we will walk you through two options that truly require no money up front.

How to invest in real estate with no money

No money to start? Still wondering how to start investing in real estate with no money and bad credit? Here are a few ideas on how to get started in real estate investing using existing assets or a zero down payment loan to get started.

Lease Options

What if you could operate and manage a rental property without having to shell out the cash to own it? Lease options, sometimes referred to as master leasing, is where you rent a property and get permission from the owner to sublease the extra bedroom or units to other tenants. This is ideal for getting into real estate with no money, as you are reaping all the benefits of owning an investment rental property without having to actually buy it.

Feeling more ambitious in your journey of how to become a real estate investor with no money? Well, you can even negotiate an option to purchase the property. In these negotiations you have the right to buy the property for a set price during a certain period of time. This is advantageous in an appreciating market. Say you negotiate a price of $150,000 for the house for a 2 year period, but within this time the value appreciates to $175,00. You can buy it and sell it for a quick profit. Not to mention, you were likely paying close to no rent with your sublets supplementing, so maybe you leverage these savings for a downpayment.

USDA Loans

How to buy real estate with no money…literally no money.

USDA loans are zero-down-payment mortgages offered by the U.S Department of Agriculture’s Rural Development office. Why? Their end game is to populate underpopulated zones of the US; so, these loans are offered only in towns with populations of 10,000 or less. Moreover, you have to have a low or moderate-income to qualify. Check out USDA.gov to see if the location where you are thinking about buying a home or investment property qualifies.

Key takeaways

Understanding how to get into real estate with no money presents challenges. Perhaps you have to be even more strategic than the accredited investor putting a large amount of capital in real estate private equity; however, what you learn along the way will serve you as you continue to scale your real estate investment portfolio until you are a big time investor.

In case you are not already clear on our stance, we recommend passive real estate investing through real estate crowdfunding platfroms and REITs, as these are relatively much lower risk than house flipping, much less complicated than seller financing and of course requires no work. Through adding small contributions to your small initial investment monthly (as opposed to the thousands you would have to put out for renovations), you can grow your capital exponentially.


Can you make money in real estate with no money to begin with?

As we previously mentioned, there are actually many options available to beginner investors with limited cash flow. Above all options available to you, we recommend passive real estate investing, as this method does not require real estate know-how to see great ROI, like it would if you were to acquire a rental property or house hack. Moreover, the spend is exact ($500-$1,000). You do not have to worry about other variables impacting your budget. We do highly recommend reinvesting the earnings or contributing to this investment on a monthly basis to create the effect of compounding returns. Basically you are creating a “savings account” that yields a much higher return than if you just left it in the bank.

Can you buy investment property with no money down?-

Yes you can! Trying to understand how to get started in real estate with no money? You have serval options. USDA loans offer 0% money down, but this is only applicable for buyers looking to purchase real estate properties in communities of populations with 10,000 or less. Not trying to live in rural America? Seller financing or lease options with the option to buy are probably more suited to help you purchase that first real estate investment property. Just be weary of the high monthly mortgage payments that would follow.

What is the best way of buying real estate without cash or credit?

Wondering how to get into real estate with no money? Feeling like you have no options? Well you have a lot of options depending on your risk tolerance. If you’re trying to buy a property in a rural area, you may qualify for a USDA loan. If you’re interested in rental property, perhaps join a REIG.