How to Start Investing in Real Estate with Low Budget

Real estate investment seems like an impossible thing for most people simply because they don’t have the money to get started. This is what you’ve always thought, right? However, there are straetgies you can use to start investing in real estate with low budget.

What if there is a way for you to start investing in real estate with little to no money on hand, would you go for it? 

Here are a few simple strategies to enter the real estate investment industry even if you have a small budget.

1. The House Trick

To be fair,  it’s not necessarily considered a trick anymore because it’s common practice for real estate investors now. If you want to invest in real estate, get a Duplex, Triplex, or even a Fourplex. You can live in one unit and rent the rest of the vacant spaces to other people.

You don’t need to worry because there are two reasons why this would work for you.

  • You can qualify for an FHA loan, which only requires a 3.5% down payment. You can use the monthly rental to pay for a portion of the mortgage.
  • It will serve as a trial ground for landlording. Eventually, you will move out and have your own house and it will serve as a full rental property.

2. Enter Partnerships

Having a partner can be a little like screening tenants: You either get a great one or an unpleasant one. It can be tricky to enter into a partnership with someone, especially if you don’t know the other person personally. But, it can be beneficial to look into a partnership for financial purposes, especially if you don’t have money, but do have the knowledge and motivation to do the work. 

There are a lot of people out there who want to start investing in real estate, but they hesitate because they don’t have any idea of where or how to begin. However, if you have the knowledge in real estate investing, it may be worthwhile to explore the partnership option. 

3. Consider a Home Equity Line of Credit (HELOC)

Did you know that the amount of equity you have on your main residence can be used to apply for a Home Equity Line of Credit (HELOC)?

Typically, a HELOC can provide a line of money for 70 to 80 percent of the equity of your property. If you have a home worth $300,000 and you still have about $50,000 of mortgage to pay, the bank can provide you a HELOC of 70 to 80 percent of the $250,000 equity of your property.

If you are scared to look for hard money loans, this is the best alternative since you won’t need to release a huge amount of money to invest in real estate. The banks can give it to you and you just have to figure out what to look for when buying a new home or property so you can start investing.

4. Seller Financing

Although not all sellers would be generous enough to provide financing to you, this scenario can happen when the seller is eager to sell their house.

When it comes to seller financing, the seller will be the bank so you won’t need to get a mortgage loan. You just have to negotiate with the seller and you can ask them for a reasonable monthly installment.

The best thing about this is that you can negotiate for a lower down payment. If you don’t have a lot of money to afford other properties, you can opt for seller financing instead.

5. Live in the House then Rent it Out

This is a type of technique that is a bit similar to house hacking, but instead of getting a duplex, triplex, or fourplex, you only need to buy a single house or property.

Basically, you move into the house, live in it, and prepare it for rentals, then move out so you can turn into a rental property. If you are implementing this kind of strategy, you have to look for a good house that would also be a good rental property.

It means that you need to look for affordable properties in a strategic location where people would be interested in renting.

Investing in Real Estate with Low Budget

You don’t have to be intimated by not having a lot of money for real estate investment. With all the tips and tricks mentioned above, you will surely find something that would fit your preferences. Knowing the right strategy based on your skills and resources can help you determine how to start investing in real estate with a low budget.

Author’s Bio:

Guest post by Jim Hughes. Jim Hughes is a content marketer who has significant experience covering technology, finance, economics, and business topics for about 3 years. At the moment he works as content manager in OpenCashAdvance.com. Email: j.hughes@appfin.org.