How to Invest in Real Estate with Little Money. 8 Actionable Tips

8 Actionable Tips For Investing in Real Estate With Little Money

By | 2020-01-22T06:48:31+00:00 January 22nd, 2020|Hard Money Blogs|Comments Off on 8 Actionable Tips For Investing in Real Estate With Little Money

For those looking on how to invest in real estate with little money, this article is exactly for you. Here we will break down some important tips on how anyone can start investing in real estate even if you have very little funds to start. It’s a myth that you need millions of dollars to invest, you can start small and build from there. Please read and understand all the possibilities available for an avid real estate investor looking to start.

An exciting and fast-paced industry, many people want to get in on the action of real estate.

However, for those with little available money, the idea of investing in this market may seem out of reach.

Yet, it isn’t entirely impossible to get your foot in the door of real estate if your financial resources are limited.

One of the most highly sought-after industries, there are, in fact, several different routes and methods you can take here.

Therefore, if you’re prepared to put in time and effort beforehand, it’s possible to invest in real estate with little money.

Here we offer eight simple but practical and effective tips that you can begin investigating straight away.

How to Invest in Real Estate with Little Money – Tip One: Access Home Equity Loans

For many people who already own a home but can’t stretch to investing in further real estate, home equity loans are good possibilities.

A home equity loan is possible when the home you own is more than what you owe on it.

For many, this is a more proven method of investing in real estate without any real money as such.

Here you can potentially look to obtain either a home equity loan or a line of credit. This then gives you access to physical money. You can then use this money as a down payment.

Alternatively, if this amount is vast, you could consider funding your entire real estate investment with it.

Tip Two: Consider House Hacking

A means of increasing your wealth and net worth quickly, the house hack strategy is a great way of entering the real estate market.

The idea here is that you live in one unit of a small duplex, triple, or 4plex while renting the other units out.

This means you will have other tenants paying for your primary residence.

House hacking is considered by many to be a fantastic investing strategy for real estate for two primary reasons.

Firstly, the FHA loan that allows you to purchase such property is more accessible. Many more people than average are eligible and can qualify easier for this loan type.

Secondly, an FHA loan requires an extremely small down payment.

Tip Three: Try Forming a Partnership

With so many people looking to get into the real estate industry, you may not need to look too far to join forces!

A most common way of investing in real estate with minimal finances, there is real power in partnering with someone who has the same intentions as you.

You may know someone who has a fantastic knowledge of real estate or can greatly help finance your endeavors. Either way, there are many advantages to structuring a good working partnership.

Better still, consider attending those real estate meetups or searching the industry for like-minded individuals.

If you can bring to the table a hustle with a partner bringing the money, you can easily begin investing in this expansive market.

How to Invest in Real Estate with Little Money – Tip Four: Look at Trading Houses

Another possible viable way to invest further in real estate is to trade your house.

By trading old property for new, you can instantly acquire an upgrade and make further real estate investments in the process.

This is often a method preferred by many in the industry for its ability to bypass those capital gains that are part of the parcel when selling property.

Tip Five: Apply for a Microloan

Microloans are aimed at those start-ups or new businesses. The idea is to generate further growth by acquiring resources.

Though microloans tend to be the smaller amounts as opposed to the more traditional ways of lending, this can sometimes work in your favor.

If you can make an application and base it around more of a business concept, micro-funding could just help with your initial real estate funding.

Best of all, because of the lower amounts offered here, microloans are said to be less stringent regarding qualification requirements.

Tip Six: Approach Those Hard Money Lenders

If getting into real estate really is your priority, but finances are low, hard money lending can present a funding option.

Such lender types are those private groups or individuals that are willing to fund those riskier of projects.

Thus, if you can’t show much in the way of finance but have a feasible plan to invest in real estate, hard money lenders can offer swifter opportunities.

Such lender’s methods can equal higher interest charges. Yet, with fewer procedures required to secure such loans, there aren’t as many requirements to fill for such loans.

Tip Seven: Investigate the Possibilities of Seller Financing

A lesser-known avenue but equally viable option is to consider seller financing to fund your real estate investment.

When done correctly, the premise of seller financing is simple.

  • You find a seller who is willing to sell you their property
  • You then make the required payments to the seller, bypassing the loan stage, agreeing on the terms and conditions beforehand
  • The seller technically provides the loan here

This method can provide an effective investing solution. However, that is if the seller doesn’t have any existing loans on the property. This means you’ll need to investigate and be clear before entering such financing.

Tip Eight: Try a Lease Option Investment

Next to seller financing, the lease option is a proven way to begin investing in real estate. The lease option works in a similar way to seller finance as well.

  • Here, the property owner will charge you (the buyer) a premium either monthly or yearly as agreed
  • This premium is in the form of higher rental payments
  • Then, this rental fee excess is channeled toward the purchase price

Lease option investing allows the potential to invest in the real estate industry, simply utilizing a higher than average rental fee. This means not parting with money upfront.

Final Thoughts on Real Estate Investing with Little Money

Ultimately, when looking to invest in real estate with little money, a huge dose of creativity is required!

However, with a good well thought out plan and above all masses of determination, it is indeed possible to get into the real estate market – no matter how little money you currently have in the bank.

About the Author:

Yanni Raz is The Founder and CEO of HML Investments, with over 15 years in the real estate and hard money lending industry, Yanni is an expert in real estate investing, trust deed investments and more.