3 Ways to Start Investing in Real Estate With Only $8,000

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So, you’ve got $8,000 to invest in real estate, you’ve got good credit. How should you use that eight grand to invest?

Well, first, let’s do some basic math. If you had to put down, let’s call it 20% on a property—you could buy a $40,000 property and put down a grand. But you’re also going to need some money for reserves and for closing costs.

With $8,000 to invest in real estate, you’re not going to find a multifamily and it will even be hard to find a single family for $40,000.

Here’s the bottom line. If you only have eight grand, you’re going to have to be looking at creative financing. Eight thousand dollars is not an inconsequential amount of money. It’s a good amount of money, but it’s just not enough to independently go put 20% down.

Related: 6 Ways to Invest in Real Estate with Little Money or Experience

How I’d Spend $8,000 to Invest in Real Estate

Now, a few options.

1. House Hack

The first thing I would look at is house hacking. If you’re willing to live in one unit and rent the others out, for $8,000, you could find a duplex.

I don’t know your market. So maybe this isn’t reasonable for your market. But if you’re in a market where you can find a duplex for—I don’t know—call it 150 grand. You could put 3.5% down, that’s about $8,000.

Related: House Hacking: A Beginners Guide to Hack Your Housing and Live for Free

I’m not doing the math perfectly in my head, but it’s about $8,000. Right? So you can get an FHA, 3.5% down loan. You buy a duplex; you live in half of it. You rent the other half out. After a year, you can move out. And now it’s just a rental property. In the meantime, you’re living for free (hopefully) because you got a good deal.

So, that’s the first approach I would take. Let’s say, you don’t want a house hack, though.

How do you invest it now?

2. Education, Marketing, Networking

Well, you could use $8,000 as your marketing money and your learning money. Now, I’m not saying go spend a thousand dollars on some get-rich-quick guru, but I would spend that money on things like:

• Reading a bunch of books.
• Becoming a BiggerPockets Pro member: You can analyze a bunch of deals on there. Analyze at least one or two deals every single day.
• Gassing up your car: Drive around looking for property. Look for stuff that seems vacant, or rundown, or multifamily, or any other type you want.
• Direct mail marketing: Send out a bunch of letters through direct mail about you buying houses. Send, say, 500 letters every single month. That $8,000 will last you, you know, a long time.

So, I would use money for that. And I would plan on using basically no money for your actual investment.

Now, how would you do that?

My preference is typically finding partners. I network to find partners who can bring the down payment, and then I bring the great deal. In other words, you’re using that $8,000 to learn and to find great deals. Now you’re bringing a great deal to the table, and you’re going to manage the process, the whole thing.

You could find somebody else who can bring the $20-30,000 for a down payment, and then you just partner together. That’s the other approach I take.

Related: How to Best Structure a Partnership for Investing in Rental Properties

3. Flip

My final idea is potentially turning that $8,000 into $30,000 by flipping houses. I would go out and take the $8,000 and try to find a house to either flip or a wholesale. Wholesale is like flipping, but you don’t do the work. You just flip it to another person who’s going to do the work and you charge a small finder’s fee.

So, you take this eight grand, you go find a good deal to flip, you flip that property. After taxes and everything, you make, let’s call it, $30,000. And now you’ve turned $8,000 into $38,000. Take that $38K, and you can dump that into a multifamily. Or you take that $38K and you do another flip—now you’ve got $78K. You can really get into a multifamily or do a whole flip now with $80K—at least if you’re using a hard money lender.

If not, if you can’t find a lender that will do it for that low down, find a partner who will flip with you. Maybe you put in $8,000 and they put in $8,000, or you just do the work or whatever you’ve got to do.

Or do a wholesale deal, which doesn’t require hard money at all. Just find a great deal. Find a buyer like me, somebody who’s willing to buy it and just upcharge like $5,000 and turn the $8K into $13K. Then turn the $13K into $20K. Then the $20K into $25K.

Get good at finding good deals so you can take that money and just continually increase it, which then you can dump it into multifamily. That’s what I would do. That’s how I’d invest $8,000.

Thoughts? Questions?

Let’s talk below in the comment section.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.