How do you start in real estate with 500 dollars?

Member since 2021 · 4 posts · 13 votes

I know this is a hilariously small amount, but what can be done with 500 dollars to start investing. I don't care how small the steps are just anything that creates that "first step". I have read real estate property investing, and am going to make a larger income through selling and providing value.

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Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

The first step is always honestly assessing where you are. Most people never even do that.

Start learning about financial independence. Read some of the classics out there. Get a handle on your spending, figure out what you will need to do to get to your first investment. Is this analysis paralysis? No. There is no such thing as analysis paralysis when you're broke as hell.

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Gary Heuston
Winston-Salem, NC · Member since 2018 · 29 posts · 25 votes
4y
check out Brandon Turner's book/audiobook "The Book on Investing in Real Estate with No (and Low) Money Down" for some really good advice on this. Basically, you use other people's money in various ways including partnerships, loans, etc. it's worth a read no matter what your strategy because in my opinion this is how you really get big in Real Estate.
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Will Clark
OP
Member since 2021 · 4 posts · 13 votes
4y
Went ahead and got it on amazon. I have developed the habit of reading these books, the thing I am coming to the realization of, is the analysis paralysis phenomenon, where I am constantly "getting ready" for the start day. I have typically found the only thing in the way is a fear of important or big deal things, so know that helps. For instance, would I be happy if I invested in the stock market 5 years ago, even if I knew nothing about it? Yes! What would you say is the best activity to get my feet wet? Networking events?
2 Reply
Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
4y
Hi Will,

Put it into a special saving account (for future investment use).

Read Rich Dad Poor Dad.

Save more money. In many locations $35,000 might start you out, in others more.

For instance you could "move in with your parents and pocket 100% of your take home pay for a year".

You need 20% of the price, plus closing costs, plus some cash reserves, a credit score acceptable to a lender and a lender pre-approval to buy a rental.

You need to know how to choose a rental where you will not be upside down = bleeding cash to own it.

If you buy a duplex and live in it, there are FHA loans for 3.5% down.

If you buy a SFH and live in it for (I think) 1 year, it's also 3.5% down.

The downside to the 3.5% loans is you must pay monthly mortgage insurance, meaning you have to be very selective in your purchase price vs rent due to paying the extra fee every month.

You could also join the military and when you get out use 0% down veteran financing to start out.

Good Luck!

5 Reply
Jeffrey Albaum
Investor · Austin TX · Member since 2018 · 151 posts · 165 votes
4y
Hi Will! Stoked you're starting your investment journey! Even though it's a small amount - you could look into investing into a real estate investment trust (REIT) if you wanted exposure to real estate but not actually buy into a direct property. You could also spend that money and go to an investing conference or join a mastermind group...the best investment is always in yourself right?!
I think you hit the nail on the head when you identified that you're quick to buy the book or buy the seminar, but have a hard time with the analysis paralysis part, and sometimes reading another book or taking another class is really just us procrastinating but telling ourselves that we're learning. It does really just come down to you deciding to take action and purchase a property. That becomes a lot easier when you have the cash to do so - so either save up or look to partner with someone who has cash already. Hope this helps and best of luck to you!
2 Reply
Joshua JanusBusiness Member
Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
4y
Buy an audible subscription and read a book on REI a week. You will set yourself up and be in a much better position to succeed. Maybe read books on creative finance and how to leverage other people's money.
[email protected]614-502-5316 Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
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Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
4y
Keep educating yourself, work 2 jobs and save every penny you can until you have some real money to get started with.
My journey started with $40k cash. $500 will barely get you a water heater.
0 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
4y
The first step is always honestly assessing where you are. Most people never even do that.

Start learning about financial independence. Read some of the classics out there. Get a handle on your spending, figure out what you will need to do to get to your first investment. Is this analysis paralysis? No. There is no such thing as analysis paralysis when you're broke as hell.
5 Reply
Chris Levarek
Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
4y
Partner up! Time, Capital, Experience. You don't have Capital or Experience. Bring the Time to a partnership. Be a local boots on the ground for outside investors, learn your market, make contacts and get your hands in the clay with cold calling, renovations, driving for dollars, etc. Then talk about it everywhere, locally, BP, social media, etc. Someone will want to partner...
5 Reply
Megan Templeton
Attorney · Birmingham, AL · Member since 2022 · 220 posts · 83 votes
4y
Hello @Will Clark,

I would recommend looking into REITs and other real estate investor groups for investing opportunities. Alternatively, different asset classes such as crypto, stocks, micro loans, etc may be a good fit for this amount of investment.
Thanks,
-Megan

1 Reply
Dave G.
Investor · Phoenix, AZ · Member since 2016 · 349 posts · 418 votes
4y
@Will Clark books on how to invest with OPM or little/no down pmt are not new. I learned how to lose a bunch of money quickly (and lose my 1st 3 rental properties) after reading the 1980s best-seller Nothing Down by Robert G Allen. I read the book, got pumped, and bought 3 properties in quick succession at age 23. One of them the seller owned free & clear and I convinced them to do a full carry-back. I even hand wrote the note with loan rate and terms, and they accepted. It can be done. But I don't know how you do that, especially these days, and not have incredible risk exposure from high leverage and likely big negative cashflows. I would work hard to save more $$ before getting serious, but that's me. And recommendations for alternative investments? Well, to me they aren't really the same thing as outright investment property ownership. I have REITs and have done Peerstreet investing (which I am concluding, not recommended) and they are more like buying equities to me. Good luck to you.
0 Reply
William Plymouth
Member since 2022 · 13 posts · 11 votes
4y
@Will Clark These other answers are definitely correct, but I have an alternative. First, find a way to meet hard money lenders, investors, and cash buyers in your area. Second, Sit down with the investors and cash buyers to see exactly what criteria they look for in a deal. Make a finders fee or an equity deal with those investors. For equity, I shoot for 5-10% depending on price. Give them the option to refi you out after 6 months so you can collect cash. Third, use that $500 to FIND THOSE DEALS. A subscription to white pages (about $20/month), an auto dialer (mojo is about $90/month), and enough stamps to send 100 letters to areas that fit your investors' criteria. I'd send the letters monthly to different areas. A singular hand written letter that you can photocopy should do the trick. Fourth, use white pages to find the phone numbers of all the letters you mailed out. Be aware, some numbers will be inaccurate. Create a spreadsheet and upload them into the autodialer. Fifth, call the houses that you mailed to as a follow up. Rinse and repeat until you find a deal. Once you find a deal that matches an investors' criteria, call them and tell them about it. Partner up for that equity or finder's fee deal then do it all over again!
2 Reply
Tim Polk
Realtor · NWI (Northwest Indiana) · Member since 2018 · 63 posts · 36 votes
4y
Find a mentor and if required, use some of the $500 to spend time learning from them. If they are a good mentor, they will most likely tell you to keep it in your pocket. Don't listen to the "You can'ts" of the world. Where there is a will there is always a way.
3 Reply
William Plymouth
Member since 2022 · 13 posts · 11 votes
4y
@Will Clark keep in mind, finding these buyers will be tough, but that's why you are finding them first. You also really have to show your value to earn that equity percentage. I'd also find a few solid contractors that you can recommend in the event that your buyers don't have any on hand. You can also skip out on the auto dialer to save money, but it definitely does help make a lot of calls at once.
0 Reply
Duncan Hayes
Investor · Austin, TX · Member since 2019 · 229 posts · 229 votes
4y
@Will Clark I literally started wholesaling with $0. Using free trials of REIPro and skipping each address myself using TruePeopleSearch. That was 2019. Back then you could pull 1,000 leads on the trial, but from what I hear it’s only 50 now. I also connected with a realtor who was sending me leads daily. My first deal came from one of those leads she sent me. I would highly recommend driving for dollars or even pulling county lists. Id pull code violations and delinquent taxes. Find out who’s on both of those lists and target those first. If they live out of state then even better because they’d have some serious motivation.
2 Reply
Duncan Hayes
Investor · Austin, TX · Member since 2019 · 229 posts · 229 votes
4y
@Will Clark I also agree with Tim Polk. Use some of the $500 to learn from someone. I know a great guy who’ll mentor you for $250!
0 Reply
Ed Tamayo
Investor · Sugar Hill, GA · Member since 2014 · 168 posts · 97 votes
4y
@Will Clark
My advice would be to get a job in real estate and learn that way.
If you have zero experience you can still get jobs showing houses, answering the phone, verifying leads, doing research, and many, many other things. If you are willing to work. After hours and weekends, I am sure you you can find something that will work for you.
2 Reply
Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
4y
@Will Clark put $50 in your gas tank and drive to work at a job in the real estate industry. Invest in learning the industry while you get paid and save the $450 for gas for the rest of the month.
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Nate Sanow
Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
4y
Underrated things you can do that are never talked about:
1. work for a lender
2. Work for a title company
3. Work for a brokerage
4. Work for a wholesaler company
5. Work for a contractor
Could keep going. But some of these may have side gigs type opportunities and can help you grow the $500 but also not have to invest with your money to learn more about RE.

2 Reply
Jake Wiley
Investor · Charleston, SC · Member since 2022 · 233 posts · 198 votes
4y
Quote from @Will Clark:

I know this is a hilariously small amount, but what can be done with 500 dollars to start investing. I don't care how small the steps are just anything that creates that "first step". I have read real estate property investing, and am going to make a larger income through selling and providing value.

@Will Clark - Lots of great thoughts here. First step is get really clear on what you are looking for from Real Estate. What do you think that it will provide for you? When you answer that question, then dial in exactly the types of RE Investing that will provide that exact benefit. Once you are crystal clear on what that is, then like others have said listen and read everything you can on the subject, while at the same time create small tangible steps you can take every day that move you in the exact right direction. Could be, attending local REIA meetings, connecting with RE agents that specialize in investment properties that you are looking for and getting a search set up.
At the end of the day, if you have a clear outcome in your mind and force yourself to take a step in that direction every day, regardless of how small you will get closer. What you will find is that by taking steps every day, you'll start to find and develop a community of likeminded people and opportunities will naturally present themselves and you can help but to start closing the gap to your goal for yourself. Its just key that you force yourself to start doing something, however you need to know where you are trying to go otherwise your actions are just sporadic.
Good luck - I'd love to hear what your first step is!
0 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
4y
Back in the day I hear a short story.

In this investor's neighborhoods one day he started seeing crummy handwritten cardboard signs saying 'I buy houses'.

A few months go by and the signs changed. Still handwritten on cardboard but now saying 'I sell houses'.

Bandit signs aren't my favorite to see around town, but the lesson is take action. Attend virtual or in-person meetups and introduce yourself while you continue to save and learn.
0 Reply
Scott JohnsonBusiness Member
Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
4y
Quote from @Will Clark:

I know this is a hilariously small amount, but what can be done with 500 dollars to start investing. I don't care how small the steps are just anything that creates that "first step". I have read real estate property investing, and am going to make a larger income through selling and providing value.

Pay that $500.00 to a wholesaling instructor and give them a portion of the first three deals you do. That's what I did.
[email protected]
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Scott JohnsonBusiness Member
Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
4y
Quote from @Duncan Hayes:

@Will Clark I literally started wholesaling with $0. Using free trials of REIPro and skipping each address myself using TruePeopleSearch. That was 2019. Back then you could pull 1,000 leads on the trial, but from what I hear it’s only 50 now. I also connected with a realtor who was sending me leads daily. My first deal came from one of those leads she sent me. I would highly recommend driving for dollars or even pulling county lists. Id pull code violations and delinquent taxes. Find out who’s on both of those lists and target those first. If they live out of state then even better because they’d have some serious motivation.

I'm sooooo annoyed with Greenville, NC. They're telling me that I'm not able to see the code violations! Considering doing a freedom of information filing...
[email protected]
0 Reply
Ben Landheer
Member since 2022 · 3 posts · 0 votes
4y
My client started with nothing, now he's consulting for those starting with have nothing.
0 Reply
Jim Spatzenfeld
Investor · NorCal · Member since 2015 · 281 posts · 240 votes
4y
Do you live in San Francisco or in White City,KS? If you live in the later, you can buy a house for $10k in your area, maybe just put it on credit card. If you live in San Francisco, save $500/week for a few years before you’re ready to invest.
0 Reply
Michael Brattelli
Real Estate Broker · Medford, NJ · Member since 2018 · 236 posts · 177 votes
4y
@Will Clark read “the richest man in babylon” and you should be able to get funds in order to get started using that method.
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