Real Estate investing with little money

[Angie Castro]

One of the most common questions that people ask me is how can they start investing in Real Estate with no money. I wish there was a strategy that takes no money and some do but you still need working capital for different things. This forum is for the purpose of giving people some options and hopefully hearing from other community members about other options! I started investing when I was 19 years old and have bought multiple properties since then. If you are a person with low capital but eager to invest in real estate here are some options I would personally recommend and I would love to hear what other people suggest!

-House-hacking: You could buy a property with down payment assistant and do different types of house-hacking. Renting by the rooms and having other people pay the mortgage. Save for a year and then primary flip. Depending on your market buying a duplex might be feasible but many down payment assistance programs do not offer credit for multi-families. 

-Wholesaling: You could get your feet wet and get to know how to source deals through wholesaling. It's not technically investing but it can help you increase your savings.

-Finding private money:  If you can find a very good deal then connect with a family member or friend that could lend you what you need for a hard money loan or to lend you the full amount. If you are using a hard money loan you just need 20% down. If you are having someone finance the entire project you can offer wither interest or equity. Interest it's always cheaper but when you are starting people will be more interested in getting equity in your deal. It's hard to have private money for a holding property. Usually you can lend for flips and builds. 

[Tanner Lewis]

I'm not a fan of wholesaling when you have no money. However, I am a fan of ethical wholesaling. Wholesaling is a great option to diversify your toolkit of potential deal exits if you are an experienced investor, but I think you should always have the ability to flip the deal but decide to wholesale due to some other limiting constraints (e.g., not enough contractors, bandwidth, etc.). By getting a wholesale deal under contract, you are often times getting a seller out of a tricky situation. Maybe they are behind on their mortgage payments; maybe the bank is taking the house in a few weeks, or maybe they have to get a lump sum of money in a few weeks to settle a lawsuit. Whatever it may be, as a wholesaler with no intent to close on the deal yourself, you promise to solve the seller's problems while trying to assign your contract to a buyer without knowing what flippers are looking for, if the numbers work. If there are no buyers, you cannot fulfill your promise to the seller. You waste their time when they could've found a legitimate buyer. This puts the seller in a much worse situation than they started, and this burns a lot of people. This is why most people do not trust wholesalers. Most ethical wholesalers don't have the bandwidth to flip the deal and would rather just assign the contract to another investor in their network. If they are unable to assign, they can buy the deal themselves and still turn a profit.