“I’d like to invest in real estate but I don’t have a lot of money.” This is a common roadblock among aspiring investors who want to participate in real estate investing but feel held back by a lack of funds to acquire their first property.
If you’re facing that situation, don’t worry. There are ways that you can participate in real estate investing even if you don’t think you can afford to.
The first strategy requires some funds: Use your money as a down payment and get a mortgage. This allows you to leverage your small amount of money and your credit score to get a much larger property than you could pay for with the cash on hand.
But what if don’t even have enough for a down payment? Don’t worry, that happens. Here are some other strategies to help you:
Use other people’s money: Find other investors who are willing to partner with you to invest. You find the deal, they put up the money, and you complete the deal. This is a very common strategy to use because many people want to invest their money but don’t have the knowledge or experience or desire to actually deal with the properties. So what you’re doing is combining what you know or can do with their financial capital to invest. Your knowledge, network, and sweat equity is the value you bring to the table.
Participate in some other aspect of the deal: Most people think of investing as the purchase of a property and its rental or sale. And within that process are many parts that an investor needs help on: Perhaps you know people with money and can make some introductions, or perhaps you can become a bird dog and find amazing below-market-value properties, or perhaps you’re skilled with home renovation skills and can be a contractor, or perhaps you’re great with people and home maintenance and can be a property manager. There are many ways to participate in the real estate investing space without actually acquiring properties.
Start with these. If you focus on the above strategies, you can quickly get into real estate without a lot of money. And you should know that there are more strategies you can use (but they are more advanced, and if you’re brand new to investing then they might not be right for you)… they include investing in other countries where houses might be considerably cheaper, or even investing as a wholesaler, which buys and sells real estate purchase agreements instead of the property itself.
Real estate investing is one of the few businesses that you can start with little or no capital. There is plenty of room to be creative and for you to profit from the skills and experience and network that you’ve developed. You don’t need a lot of money if you bring something else of value to the table.