Get Started In Real Estate Investing With Little Money Down
By Paul Esajian on June 26, 2015
What’s the best way to get into real estate investing when you have very little money to work with?
While there has been a lot of noise made about the high volume of cash buyers and investors in the U.S. real estate market, that doesn’t mean there isn’t room for those that have very little money to put down on deals. There are now many Millennials, as well as members of Generation X, that are eager to get into real estate. They are convinced of the benefits, power, and need of investing in real estate. They are finally getting their finances on track. They may even have a few thousand dollars to get started. However, where can you start with such small sums of capital? What’s the best way to get in and start generating more wealth?
Many would advise that the best choice is to invest in their education. That will help them avoid losing the little they have, and help them maximize what they’ve got. Some have already got a good handle on the basics of investment and the real estate market. They know they will invest in more education and even getting a coach, but are determined to start putting money to work in the market. If this includes you, here are seven ways to get going:
Lots and Land
Lots and rural land can be very inexpensive. They can be some of the cheapest property to buy. This can make them a great draw for new investors working with limited cash. The holding costs of undeveloped land can be extremely low too. However, land often has limited income potential. This dynamic changes if land can be leased for camping, parking, or mineral and timber rights can be sold or leased.
Mobile Homes
Mobile homes have experienced a sizable resurgence in attention in the last few years. Many very intelligent investors and bankers are finally realizing that if they look beyond looks to the numbers mobile homes can be very profitable. They are easier to trade than alternative forms of housing and ‘tiny houses’, and demand for them is strong. Affordable housing is very limited and mobile homes are about as affordable as most can get. But do watch out for financing issues, and eminent domain.
Wholesaling Houses
With hard money lenders coming back to the market and transactional funding sources wholesaling can even be done with no money down. It’s one of the fastest ways to turn lump sum profits in real estate, and generate a high ROI. Those profits can then be diversified into different real estate investment strategies.
Private Lending
For those that have some capital but can’t find real estate deals they like, or don’t have the time, they can always back other investors with the inventory and time. This can be done via crowdfunding, partnerships, and making mortgage or business loans to other hands-on investors.
Buy Cheap Homes
Even though the US real estate market has been racing back into shape there are still some surprisingly cheap properties for sale. As of mid-2015 there were still HUD homes for sale for under $10,000, and freshly remodeled homes in major cities for less than $50,000. While they can be hard to finance some can purchase these properties for cash or put them on a credit card.
Use Leverage to Buy Rental Homes
How about using your limited cash to make a small down payment and either get a mortgage or look for seller financing. With interest rates so low, and rents high there can still be great cash flow to be found.
Lease Options
With the right sellers and properties lease options can be used to control a lot of property with a little money, and to lock in rapidly growing wealth.
Summary
No matter how little you are working with, there are numerous ways to get started in real estate investing. Providing you’ve invested in your education, it’s just a matter of selecting the best investment strategy to kick off with. Then you can expand and scale as the profits come in.