How to Start Investing in Real Estate with Little Money
If you're on a tight budget and looking for ways to get started in real estate investing, this article is for you. These are some popular strategies to profit from real estate.
Real estate investment can be one of the most meaningful and rewarding ventures you can do. However, it can also be one of the most challenging to get into. Investments, especially in real estate can be financially rewarding, however you will need money to start off with in order to begin. This lack of startup capital can be the biggest barrier that many people face when entering real estate investments.
If you are wanting to start investing in real estate and do not have a spare thousands of dollars sitting in the bank, you will want to know how to start investing with little money. Luckily, there are ways to invest with little to no money, and we will discuss them in more detail here.
Do not let a lack of capital stop you from beginning what could be the greatest adventure of your life. Real estate investment is very rewarding, and once you pass the first hurdle of getting your foot into the door, you will be on your way to being a full-blown investor.
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Getting Started with House Hacking
House hacking may sound silly, but it is how many people start their real estate investment adventure. House hacking is best described by Coach Carson as being a way to generate income from a property that you live in. You could purchase a small duplex or multi bedroom house and rent out part of the property or even a single room. That way you have somewhere to live, and the income you generate from renting out the room will help pay your mortgage.
Many banks and lenders will even offer special low-cost financing for owner-occupant financing as it lowers the risk. In some instances, you will be able to get a home loan for a property and only need to put down up to 3% of the cost. This makes a $200,000 property suddenly much more affordable.
Starting off small will be the key – do not try to purchase a 10-bedroom house and try to rent out the other 9 rooms. Better off starting with an apartment or duplex that is easy to manage and maintain.
Flip and Profit
If you have watched any of the renovations shows on TV, you will know that there is money to be made in flipping houses. However, they generally require a large initial investment to make a profit. Luckily, there is a way to flip a house on a smaller scale with a much smaller investment. If you can find a property that has the potential to rise in value with a little bit of work and is livable, then you can do what is called live in-house flip.
With a live-in house flip, you would reside in the property as you make small cosmetic changes to raise its value. There is a lot of renovation work that can be done without the use of a contractor. Painting, flooring, cleaning, landscaping, and fixing up walls and windows are all able to be done without a professional and can really raise the value of your property for resale. And because you are living in the property while you work, it is not sitting empty while you pay rent or a mortgage somewhere else.
Crowdfunded Real Estate
You may not have thought that real estate investments were something that you could crowdfund, but The College Investor is here to explain why it could be ideal for those with little money.
If purchasing a property outright is simply out of your reach for whatever reason, then participating in crowdfunded real estate could be perfect. Those involved with the crowdfunding will pool their money with other investors. This money is then used to invest with an experienced rental investment property owner.
Through crowdfunded real estate, you will gain the expertise from the experienced investor, and not have to worry about the complexities involved. Someone else is responsible for the loans and paperwork involved, you just invest a small amount of money – whatever you can afford.
Real Estate Partnerships – Meetup, Partner, and Profit
So, you alone may not be in a financial position to invest in real estate. But that does not mean that others are not. You also might have some expertise that you are able to offer, and only be lacking in the financial department. A real estate partnership is one way that two or more investors can join forces and use their combined skills and capital to invest together.
It does help if you know the partners that you are investing with, but this is not a prerequisite. Bigger Pockets explains that if you can find someone who compliments your existing skill set, then together you can form a perfect partnership. There will be someone out there who has the money ready to invest, and just lacks in knowledge. If you have that knowledge, you can make a deal that is fair, and together you can enter the investment game.
Real estate meetups are the perfect place to find an investment partner. You just need to be confident in your skill set and know what you are looking for in a partner. Then ensure that you make an agreement that is legally bound – you do not want to be taken advantage of.
While it helps to have a large amount of startup capital when investing in real estate, as can be seen, it is not always necessary., With some careful planning and forethought, you can enter the real estate investing field with little to no startup cost. The returns may be smaller and take longer to present, but as you start to grow, you can start investing in bigger and more profitable ventures. The key is to get started, and any of these methods will allow you to do that.
Charles is the founder of infoSpike.com. His real estate investing experience started in 2004 and he is currently focused on rental property projects. He enjoys learning about real estate investing, personal finance, and marketing. Read more about Charles here.