How to Invest in Real Estate With Little Money

Real estate has always been a go-to choice for building wealth, but the perception that it requires deep pockets often scares people away. The truth? You don’t need a fortune to start. Whether you're a first-time investor or someone looking to dip your toes into real estate without significant capital, there are creative, accessible options to get started.

Leverage Real Estate Investment Trusts (REITs)

Photo by Khwanchai Phanthong

Understanding REITs

Real Estate Investment Trusts, or REITs, are companies that own or finance income-producing real estate across various sectors. Essentially, they allow everyday investors to buy shares of large-scale commercial real estate portfolios—without needing millions of dollars.

For example, REITs focus on properties like apartment complexes, office buildings, and retail spaces. The best part? They’re publicly traded like stocks, making them an easy entry point for novice investors. For additional insight into how REITs function, visit the REIT official investing guide.

Benefits of Investing in REITs

Here’s why REITs are a smart option when starting small:

1. Low Capital Requirement: Some REITs don’t ask for big initial investments, making them suitable for people with a lower budget.
2. Diversification: Owning shares in REITs gives you exposure to multiple property types in different locations.
3. Liquidity: Unlike traditional property investments, REITs can be easily bought and sold on the stock exchange.
4. Regular Income: Many REITs pay consistent dividends, providing a steady income stream.

For more on the financial advantages of REITs, check out the Financial Benefits of REITs.

Try Crowdfunding Platforms for Real Estate

How Real Estate Crowdfunding Works

Crowdfunding platforms allow investors to pool their money and fund real estate projects collectively. These platforms are modernizing the way people invest in real estate by lowering the barrier to entry. With some platforms, you can start investing with as little as $10 or $20.

One popular example is Fundrise, which provides access to private real estate opportunities for both accredited and non-accredited investors. You browse through investments, commit funds, and then watch your portfolio grow.

Best Practices for Choosing a Platform

Before jumping in, it’s important to vet crowdfunding platforms carefully. Keep these tips in mind:

• Fees: Check transaction and management fees. Some platforms take a hefty cut of your returns.
• Reviews: Look for testimonials to assess user experiences.
• Track Record: Research the platform’s past projects and their performance.

If you're ready to explore the possibilities, this best crowdfunding platform guide can help you decide where to start.

Use House Hacking to Reduce Costs

What is House Hacking?

House hacking is one of the most practical, hands-on ways to break into real estate with little money. It involves buying a property, living in a portion of it, and renting out the remaining space to cover your mortgage or other expenses.

For example, you could buy a duplex, live in one unit, and rent the other. The rental income helps pay for the property, reducing your out-of-pocket costs. Interested in more details? Learn more about house hacking from Rocket Mortgage.

Types of Properties Ideal for House Hacking

Some property types lend themselves better to house hacking than others:

1. Duplexes and Triplexes: Ideal for renting one or two units while maintaining privacy.
2. Single-Family Homes: You can rent out rooms or a finished basement.
3. Accessory Dwelling Units (ADUs): Convert a garage or detached property into a rental.

Choosing a property with strong rental demand increases your chances of success, making this strategy highly rewarding.

Partner with Others or Join Real Estate Investment Groups (REIGs)

How Partnerships Work

Can’t go it alone? Partnering with others lets you pool financial resources and minimize individual risk. For instance, two individuals can combine funds for a down payment on a rental property and share both profits and expenses.

Partnerships are also useful for pairing someone with capital and someone with expertise. Everyone brings something to the table, whether it’s cash, market knowledge, or management skills.

Exploring Real Estate Investment Groups

REIGs are groups of investors who pool their money to invest in properties collectively. These groups might purchase apartments, commercial buildings, or development projects, distributing the risks and responsibilities.

By joining an REIG, you can invest smaller amounts while gaining access to larger opportunities. However, be cautious: understand how profits are distributed and ensure the group has a solid track record.

Conclusion

Investing in real estate with little money isn’t just possible—it’s practical. From buying shares in REITs to exploring crowdfunding platforms and house hacking, there are plenty of affordable strategies to get started. Partnerships and REIGs offer additional gateways for those seeking to amplify their reach.

You don’t need millions to begin. All you need is access to the right tools and the courage to take the first step. Start small, stay consistent, and watch as your real estate journey unfolds.