Investing in real estate is a very appealing way to secure your finances for the future, but a lack of investment capital is the major barrier to entry into the market. Without money to buy your first property, you might be left with nothing but pipe dreams.
However, it doesn’t need to be that way. It is possible to learn how to invest in real estate with little money, you just need to know the right routes to entry.
So, how do you do it?
House hacking is about trying to generate a rental income from your home. The classic house hack will see you moving into a multi-unit property, like a duplex, and renting out the extra units for an income.
You could also rent any spare rooms out to roommates or rent out your basement as an apartment.
You can do this with little money down as you will be able to get owner-occupant financing to buy the property.
Master Lease Options
It may come as a shock to you to learn that you don’t need to buy a house to get into real estate investing. You just need to rent it.
If you have permission from the property owner, you might be able to sublease the additional bedrooms or units to tenants. By doing this, you could get most of your rent covered each month.
The Live-In Flip
Flipping houses usually involves a considerable amount of capital investment. By working a technique known as the “live-in flip,” you could take advantage of a profitable tax law.
You’ll need to buy the house, move into it, and live in it for at least two out of five years. When you sell the house for a profit, you will pay no taxes up to $250,000 or $500,000 if you own the property as a couple.
Real Estate Crowdfunding
Real estate crowdfunding allows you to put down smaller amounts of cash alongside other investors. This can be used to invest in rental properties or hard money loans. The investment style is similar to a REIT.
REIT stands for Real Estate Investment Trust. This is similar to a mutual fund
. When you invest in stock in a REIT, you will own a tiny piece of several commercial properties that all generate income.
This is a passive form of investment, however, as the shares are more liquid.
If you have a spare room in your current home, or you would like to rent the whole of it out when you are not using it, then there is a lot of money to be made using Airbnb.
This is a low-cost way of investing in real estate.
Investing in Real Estate with No Money
As you will see, it is possible to start investing in real estate with no money. There are ways that you can earn from a property without even owning it.
If you need more advice on real estate, feel free to contact us.