Investing in Real Estate with Limited Funds

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Investing in Real Estate

The following is a contribution from Brandon at Bigger Pockets. 

How much money does it take to invest in real estate?

Ten thousand dollars? Fifty thousand dollars? One million dollars? Or can it be done for significantly less?

You’ve probably seen the late night cheesy TV gurus advocating “zero down real estate investing” and while yes, it is definitely a possibility, it’s not as easy as those gurus make it sound. So let’s look at the true story of little-down real estate investing and learn a few strategies that you can use to start building your own real estate empire.

Is Investing With Limited Funds a Smart Thing?


Before diving into the actual strategies you can use, let’s first clear the air about the wisdom of investing in real estate before being wealthy. First – you do not need to be rich in order to invest in real estate. However, you also do not want to be broke, because real estate carries a degree of risk that you must have the ability to handle.

For example, if you own a rental house and your tenants end up being demons from hell, forcing you to evict – can you handle the $1500 for an eviction and several months of lost rent? If not – think twice about investing. That said, those cases are rare and by screening tenants carefully and managing effectively, most of those horror stories will never come true.

So what kind of financial position should you be in before investing? The choice is up to you, but I recommend a place of security. If you are wavering between jobs, up to your ears in credit card debt, or losing your mind from having too many projects going at once: hold off. Have a solid foundation (physically, mentally, and financially) before getting started and you’ll be able to grow your investments at a much more stable and fast pace.

3 Strategies for Investing with Limited Funds


Following are three strategies you can use to start building up your real estate investments without having a lot of money. If you have any questions about these at all, I encourage you to jump into the comment section on this blog and ask away! I’m happy to help!

FHA Loans


The FHA, also known as the Federal Housing Administration, is a federal institution that helps banks and other lenders provide low-down loans for homeowners. While the FHA doesn’t actually issue the loan, they insure the loan against loss so the banks are more loose with their checkbooks.

The benefit of the FHA loan is that you can purchase a home for a mere 3.5% down payment – which means on a $100,000 home, you can put just $3,500 down (plus closing costs.)

While FHA loans are ONLY for homeowners, you can use these loans to invest in real estate by purchasing a property that has multiple units, such as a duplex, triplex, or 4-plex. These properties exist in every location and can be a terrific way to get your feet wet in the landlording business space without needing the typical 20% down.

Additionally, when it comes time for you to move on to a bigger and better primary residence for yourself, you can keep the loan and hold on to the property as long as you’d like (though you are only allowed one FHA loan at a time.)

The biggest piece of advice I can offer for going this route is to ensure you get a great deal. Buying a duplex is not such a great thing if you’ll be losing money each and every month – so shop around, do your homework, look at ALL the costs associated with owning the rental, and be conservative in your estimates!

Using Partners


Most of the successful investors I know do not invest alone, but work with others to make deals happen. You see – no one comes to a deal with everything they need to succeed. We all have strengths and weaknesses and working with a partner who has the strengths that you lack (like, money) can help you get started earlier than would normally be possible.

A partner can be anyone at all, but ideally, look for a partner who:

  • You get along well with
  • Is not controlling or bossy
  • Has good credit and income
  • Trusts and respects you
  • You trust and respect

If you are looking to be one half of the partnership and don’t have the “money” side of things figured out, you’ll need to define what you are bringing to the relationship. Ideally, you will be bringing the education needed to make the deal happen, which you can get by reading books, interacting on real estate investing forums, listening to real estate investing podcasts, and talking with actual investors.

*Related: Do you want to invest in real estate but have limited funds? Check out our guide of the best real estate crowdfunding sites that let you invest with little money.*

To help illustrate the point, let me tell a brief story of a recent investment I was a part of. The property was a triplex located in a good neighborhood with a terrible paint job but amazing cash flow potential. I knew I had discovered a diamond in the rough so I quickly went to work putting together the deal.

I called up a friend of mine with a great job, great credit, and who I knew wanted to diversify his portfolio. We agreed that he would supply the down payment and repair costs needed and get the bank loan in his name, while I would make sure the work was completed and would manage the property.

We are currently splitting over $600 per month in cash flow – and I don’t have a single penny of my own money in the deal.

A final note about partnerships: even if you are partnering with your best friend or your own mother, get everything in writing and clearly define the roles of the partnership as well as who gets what profit. Set up the partnership agreement with a qualified attorney to help ensure a long lasting business relationship.

If you’d rather not go this route, read our review of Streitwise to learn how to invest in real estate on a crowdfunding platform.

The Hybrid Flip


Finally, a third way to invest in real estate with limited funds is something I like to call “The Hybrid Flip.” No doubt you’ve seen the television shows where investors go into an ugly house, make it beautiful, and then sell it for a huge (or not-so-huge) profit.

This technique is known as “flipping” and is one of the more popular “real estate investing jobs” out there. Hybrid flipping is similar, but instead of selling for a large profit, the home is refinanced with a long term loan. Let me explain exactly how this would work with an example:

You find a property for $50,000 (that should sell for $100,000) that is in a good neighborhood but smells like dirty animals and has ugly wallpaper. You purchase the home using a short term loan, like a hard money loan, and use your own two hands and $6,000 of cash (or credit if you are risky) to clean the property up and make it shine.

Then, you rent the property out to a nice couple for $1,100 per month and after six months (the minimum time required for this strategy by many banks) you head to the local bank and refinance the property – paying off the original loan and the money you spent on repairs. Bada bing, bada boom – you now own a nice cash flow positive rental in a great neighborhood and have no money out of pocket after the refinance.

This strategy is definitely a little more complicated than your normal investments, so be sure to do your homework before embarking on such a journey and make sure your repair projections are correct (I recommend doubling your repair budget, just in case!)

Get pre-qualified from a bank ahead of time and make sure you’ll have the ability to refinance in the future. Also – be sure to have multiple exit strategies in place in case plan A doesn’t work out.



One of my favorite things about real estate is the creativity an investor can use to make money. There are few other areas of life where creativity can take the place of money – but real estate is one of them. Hopefully these three suggestions give you a springboard into the world of creative investing and you can start implementing some of these strategies in your own life.


Do you have any other ideas for starting your real estate investing with limited funds? Share your comments or questions below!


Brandon Turner is an active real estate investor and Senior Editor at, the real estate investing social network. He enjoys writing epic posts about real estate, like the Ultimate Beginner’s Guide to Real Estate Investing or the Ultimate Guide to Tenant Screening.


Photo courtesy of: James Thompson

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

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  • DC @ Young Adult Money says:

    My friend went in on a duplex with another friend recently and it’s worked out okay for them so far. I think I’m too controlling to go this route as I would hate to have to agree on every little decision with my partner. I know they will run into issues deciding what to do with their cash reserve when it gets big enough; what if one wants to keep growing the cash reserve and the other wants to renovate the kitchen? These are things I would not want to have to debate with a partner.

    • Brandon Turner | BiggerPockets says:

      Hey DC,

      Yeah, there are only a few people I could imagine being in a partnership with – and they’d have to be “silent partners!” Thanks for the comment!

  • Froogalist @ says:

    REITs are one option people could consider if they are looking for real estate income minus the lawyers, the tenants, the mortgage insurance, the maintenance, the downpayment, etc.

    • Brandon Turner | BiggerPockets says:

      Definitely! I didn’t include REITs in this discussion for simplicity sake, but I agree – REITs can be an easy way to invest in real estate without getting your hands too dirty!

  • Matt Becker says:

    I’ll echo the REITs suggestion from Froogalist. One thing that I think can get overlooked with real estate investing is the kind of time involved. The returns can be good, but I think when compared to throwing your money into a good index fund that the time and energy involved should be part of the consideration. With that said, I think real estate is certainly an interesting avenue for us to consider down the road.

    • Brandon Turner | BiggerPockets says:

      Hey Matt, thanks for the comment. Definitely – there is a huge time/hassle factor when talking about real estate. That’s actually the thing I love more than anything else in real estate investing. Very few areas of investment life allow you to trade cash for time. For example, you can’t buy $100,000 of an index fund by harnessing your nights/weekends for a few months- but you can buy a $100,000 in real estate using sweat equity. It’s definitely not for everyone – but it can be a good option for someone who has little cash but excess time. Thanks again for the comment!

  • Kim@Eyesonthedollar says:

    I’m sure there are situations where partnerships work well, but we’ve had a very bad experience with that. Even if your partner doesn’t uphold their end of the deal, the only real thing you can do is take them to court, which isn’t a very fun option. I would never have a real estate partner again unless it was a very special circumstance.

    • Brandon Turner | BiggerPockets says:

      Hey Kim, thanks for the comment. You are totally right – partnerships can create some big problems including court appearances if things go wrong. I’ve had good experiences so far, but I know others who have not. Thanks for the comment, as always!

  • Mr. Utopia @ Personal Finance Utopia says:

    Looks like I was already beaten by others on the REIT suggestion. It’s an indirect way of getting into real estate and you likely wouldn’t get the monthly cash flow from renting out (I don’t think REITs pay dividends like that!), but you can at least mirror the overall returns of the real estate market.

    These are all good suggestions listed above in the article. From my perspective, though, the up front capital ($50-100k) is still a substantial amount of funds. Plus, where I live, the cheapest thing you can get is $200k!

    • Brandon Turner | BiggerPockets says:

      Thanks for the comment, Mr Utopia! Yeah, investing definitely takes on a different nature in those expensive markets. That said, I’ve noticed that even in the most expensive areas of the country (LA, NY, etc) there are always lower priced areas within a 2 hour drive for those looking for a cheaper entry level!

  • KK @ Student Debt Survivor says:

    I tend to believe that old saying “the only ship that doesn’t sail is a partnership”, but I know other folks who have had good experiences with a partnership (I know personally I’m too controlling for that). I’d be interested in flipping houses, but here a 1-bed will set you back about $400,000, so there’s not much room to flip.

    • Brandon Turner | BiggerPockets says:

      Hey KK,

      Thanks for reading and commenting. Wow- a 1-bedroom for $400k is crazy compared to my area! That said – those neighborhoods are some of the best to flip in if you can get the cash to do so – cause there is more room for error – but they also pose some extra risk if the market drops!

      Thanks for the comment!

  • Grayson @ Debt Roundup says:

    I have wanted to get into real estate, but the barriers to entry (ie costs) is what is keeping me out. One day I will do it, but just not now.

  • Adam @ Money Rebound says:

    Nice idea with the Hybrid flip. Spend as little cash as possible, do the job well and do as much of the work as possible yourself and you could certainly win big. I guess the important thing is to find a good tenant and hope that there isn’t another housing/credit crisis during your 6 month wait. Also it’s important to keep in mind that if your financial position were to change for the worse during that period, then you might not find it so simple to refinance. There’s risk in everything though and I think this strategy sounds good to me.

    • Brandon Turner | BiggerPockets says:

      Definitely Adam – that is definitely the risk with the Hybrid. This is why getting an AMAZING deal is so important : because it opens up alternative exit strategies in case something goes wrong. If the market crashes the value by $50,000 – but you had $70,000 in equity = you have a lot more options!

      Thanks for the comment!

  • Stefanie @ The Broke and Beautiful Life says:

    Real estate in NYC and the surrounding areas is so ridiculously expensive, I can’t imagine feeling I had enough money to take on that kind of investment- even with these tips.

    • Brandon Turner | BiggerPockets says:

      Hey Stefanie,

      It’s true- in some areas like NYC – prices are crazy! That said – I’ve always found that within a 2 hour drive of every major city there are low prices areas for those who really want to jump in at a lower price point!

      Thanks for reading and commenting!

  • C. the Romanian says:

    I am a bit old school here and I would say “if you don’t have the money, don’t do it”. Yet again, I’m not on my way to become a millionaire anytime soon so this might not be the best approach. As scary as it might sound to me because of all the disadvantages, sometimes you must take a risk and do it.

  • Jack @ Enwealthen says:

    Partnerships scare me. It’s challenging finding someone you can trust, since trust is based on experience, and you only get the experience by jumping in.

    I’ll second the recommendation – any partnership get it all in writing. Who does what. The money. And most importantly, what happens if the partnership breaks up, or one person wants out.

  • Ned says:

    Brandon- thanks for the article and specifically the tip on “hybrid flip”

  • Todd @ Fearless Dollar says:

    What a great article. Man it makes me sad that years ago I invested $15,000 in a business and the guy had a near mental breakdown (dad died tragically, girlfriend hit buy a car). It was horrible. Unpredictable. And he never bounced back. Lost most of the investment. Now I wish I had done something more secure, which is real estate.

    Thanks for these tips. I live in San Diego and properties under $100,000 are not the nicest, and don’t draw great tenants. Any thoughts on finding properties at that price in a more expensive region??

  • The Norwegian Girl says:

    In my country you really can´t have limited funding when you invest in real estate. For first-time home buyers there´s a 15% down payment, and for second time buyers you have to have a 25% down payment!!!

  • says:

    I personally think that you should wait until you have the funds available that you need for your desired project before you get involved in real estate. There are many dangers in the shared funding options and you can also lose some of the control in these instances.

  • Ankit | Getting Money Wise says:

    Partnership approach seems to be gaining traction. During my recent trip to home (India), I checked with a few friends on what they have been upto. Two of them have actually actively started investing in real estate and the way they are doing it is through partnership. Both of them borrowed a certain amount from their families, found like minded partners (one of the partners is a real estate veteran) and they have been successfully flipping properties now. Something I plan to seriously consider in the near future

  • Daisy @ Prairie Eco Thrifter says:

    A friend of mine is looking into renting to own, because their family wants to get into real estate but doesn’t have a down payment. It gives me a pit in my stomach to think that they are considering it but, they are just really determined to get in a place. I think partnership is a better way to go.

  • Laurie @thefrugalfarmer says:

    Great info here, Brandon! We’ve been considering the real estate market but holding off due to limited funds. Thanks for giving us hope that we can make it happen!

  • Pauline @ Make Money Your Way says:

    I did something similar to the FHA loan and it has been a great way around putting too much money down. The hybrid flip is a really interesting strategy, although you have to be ready for a quick sale if it doesn’t work out and there is quite a bit of work involved.

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