Real Estate Investing Basics

3 Ways to Start Investing in Real Estate With Only $8,000

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP, Real Estate Investing Basics
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So, you've got $8,000 to invest in real estate, you've got good credit. How should you use that eight grand to invest?

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Well, first, let's do some basic math. If you had to put down, let's call it 20% on a property—you could buy a $40,000 property and put down a grand. But you're also going to need some money for reserves and for closing costs.

With $8,000 to invest in real estate, you're not going to find a multifamily and it will even be hard to find a single family for $40,000.

Here’s the bottom line. If you only have eight grand, you’re going to have to be looking at creative financing. Eight thousand dollars is not an inconsequential amount of money. It’s a good amount of money, but it’s just not enough to independently go put 20% down.

Related: 6 Ways to Invest in Real Estate with Little Money or Experience

How I’d Spend $8,000 to Invest in Real Estate

Now, a few options.

1. House Hack

The first thing I would look at is house hacking. If you’re willing to live in one unit and rent the others out, for $8,000, you could find a duplex.

I don’t know your market. So maybe this isn’t reasonable for your market. But if you’re in a market where you can find a duplex for—I don’t know—call it 150 grand. You could put 3.5% down, that’s about $8,000.

Related: House Hacking: A Beginners Guide to Hack Your Housing and Live for Free

I'm not doing the math perfectly in my head, but it's about $8,000. Right? So you can get an FHA, 3.5% down loan. You buy a duplex; you live in half of it. You rent the other half out. After a year, you can move out. And now it's just a rental property. In the meantime, you're living for free (hopefully) because you got a good deal.

So, that’s the first approach I would take. Let’s say, you don’t want a house hack, though.

How do you invest it now?

2. Education, Marketing, Networking

Well, you could use $8,000 as your marketing money and your learning money. Now, I’m not saying go spend a thousand dollars on some get-rich-quick guru, but I would spend that money on things like:

  • Reading a bunch of books.
  • Becoming a BiggerPockets Pro member: You can analyze a bunch of deals on there. Analyze at least one or two deals every single day.
  • Gassing up your car: Drive around looking for property. Look for stuff that seems vacant, or rundown, or multifamily, or any other type you want.
  • Direct mail marketing: Send out a bunch of letters through direct mail about you buying houses. Send, say, 500 letters every single month. That $8,000 will last you, you know, a long time.

So, I would use money for that. And I would plan on using basically no money for your actual investment.

Now, how would you do that?

My preference is typically finding partners. I network to find partners who can bring the down payment, and then I bring the great deal. In other words, you’re using that $8,000 to learn and to find great deals. Now you’re bringing a great deal to the table, and you’re going to manage the process, the whole thing.

You could find somebody else who can bring the $20-30,000 for a down payment, and then you just partner together. That’s the other approach I take.

Related: How to Best Structure a Partnership for Investing in Rental Properties

3. Flip

My final idea is potentially turning that $8,000 into $30,000 by flipping houses. I would go out and take the $8,000 and try to find a house to either flip or a wholesale. Wholesale is like flipping, but you don't do the work. You just flip it to another person who's going to do the work and you charge a small finder's fee.

So, you take this eight grand, you go find a good deal to flip, you flip that property. After taxes and everything, you make, let's call it, $30,000. And now you've turned $8,000 into $38,000. Take that $38K, and you can dump that into a multifamily. Or you take that $38K and you do another flip—now you've got $78K. You can really get into a multifamily or do a whole flip now with $80K—at least if you're using a hard money lender.

If not, if you can't find a lender that will do it for that low down, find a partner who will flip with you. Maybe you put in $8,000 and they put in $8,000, or you just do the work or whatever you've got to do.

Or do a wholesale deal, which doesn’t require hard money at all. Just find a great deal. Find a buyer like me, somebody who’s willing to buy it and just upcharge like $5,000 and turn the $8K into $13K. Then turn the $13K into $20K. Then the $20K into $25K.

Get good at finding good deals so you can take that money and just continually increase it, which then you can dump it into multifamily. That’s what I would do. That’s how I’d invest $8,000.

Thoughts? Questions?

Let’s talk below in the comment section.

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Brady Potts Title Representative from Missoula, MT
    Replied 17 days ago
    I think this is invaluable for those getting started. For vets, you can also house hack using a VA loan for 0% down AND use the other rental units in the 2-4 family to help qualify you for the loan if you can meet certain criteria. This can help people get more house for less money. However, the VA usually requires you to already have some rental expereince in your history to do this. Most lenders look at this as having K-1 (rental income) in your tax history. There is a way around this though. The VA only requires "proof of rental management experience" and most lenders take this as personally owning some. However, is there another way to get management experience? How about working as a property manager? My wife and I did just that. We wanted to buy a duplex, but our income wasn't high enough to qualify for one in our area unless we could use the rent from the other side to help qualify. So, we searched until we found a lender that let us take this angle. We both got our PM licenses (in MT its a 3 day course for $400 and a quick test). We then managed a handful of rental units for freinds and family for 2 years on the side until the "experience part" was met. Bam! We checked the box and were able to get pre-qualified for a higher loan than we would have otherwise. Not every lender was willing to do this, but shopping around and building relationships helped us find the right person. Additionally, we structured the loan so we actually got a check at closing for about 5k. Not bad in my opinion. Now we own a sizeable duplex and are living almost "rent" free while enjoying a multitude of other benefits. If anybody has questions on the specifics, I'm happy to share my experience.
    Ryan Trebilcock New to Real Estate from Augusta, GA
    Replied 14 days ago
    Brady, Do you know what the VA requirements for multifamily properties are? I tried to by two adjoining townhomes recently, and could only purchase one.
    Vadim Rey Rental Property Investor from Norfolk, VA
    Replied 11 days ago
    Ryan - the requirements with any residential loan program are that the property must be contained on one lot. So you could purchase four town homes or a quadplex, as long as they exist on one lot.
    Tasha Beverly Rental Property Investor from Portsmouth, VA
    Replied 16 days ago
    Hi Brady, I definately would like to learn more about your process. Can you also do this with Va Vendee?please share :-)
    Vadim Rey Rental Property Investor from Norfolk, VA
    Replied 11 days ago
    "The VA Vendee Loan Program offers qualified borrowers the option of purchasing VA Real Estate Owned (REO) properties with little to no money down. The program is available to Veterans, non-Veterans, owner-occupants, and investors." Tasha - which aspect of Brady's process are you wondering is possible with the VA Vendee program?
    Brady Potts Title Representative from Missoula, MT
    Replied 16 days ago
    Hi Tasha, Unfortunately I'm not familiar with the VA Vendee program, what is it?
    Randy Moore New to Real Estate from Dardanelle, AR
    Replied 17 days ago
    Thanks Brandon! Great ideas on how to take an initial investment and multiply it into something much larger.
    NA NA Flipper/Rehabber from Brooklyn, NY
    Replied 17 days ago
    This is an exciting way to get started. I have more than that in savings but even better is a business loan I am anticipating will allow my family to get our first home-a multifamily-that in a year we can move out of or rent. In this way we house hack, buy and hold and later either vacay the property or flip it and get additional properties with our new found money. That's the plan and yet I am here looking for additional options to go faster. Is there a way to do that? Thanks for the insight Brandon. Kudos on the 2 Books btw-How To Invest In RE and Rental Properties.
    Vadim Rey Rental Property Investor from Norfolk, VA
    Replied 11 days ago
    Lots of ways to go faster! The general strategy is to partner with other folks who are doing bigger deals where more money can be made. It's doable in the residential housing space and in the commercial multifamily space, though the commercial space allows for much more controlled value growth with less volatility (i.e. forced appreciation).
    Tasha Beverly Rental Property Investor from Portsmouth, VA
    Replied 16 days ago
    Brady, thats gud info! please share about your process.
    Alamu Oluyemi Jeremiah
    Replied 16 days ago
    Good evening, I am really impressed. I need more of Ideas on how to get started. Thank you Sir.
    Chris Cooper Investor from IL
    Replied 16 days ago
    Thanks Brandon! Interesting insight, however this one has me scratching my head 'My final idea is potentially turning that $8,000 into $30,000 by flipping houses. I would go out and take the $8,000 and try to find a house to either flip or a wholesale. " Where in the world can a house be bought with the initial $8,000? Well I am sure there are lots of places "in the world" where $8K would buy something, but in the US ? Maybe I am misunderstanding but as I read it this idea seems really unrealistic.
    Cheryll Ramirez Lender from El Paso, TX
    Replied 13 days ago
    Hi Chris. Most of my investors close on their properties for less than 8K. The least amount out of pocket is the BRRR. Buy the property with Hard Money, Repair the property with Hard Money, put a renter in the property, and then refy. There are HML's like myself that lend up to 100% of purchase and repairs. The best part is, when you refy, the equity counts! So you don't need a downpayment. This makes it very easy to build your rental portfolio with very little out of pocket. Additionally, there are places in the US that have less expensive properties in states that are landlord friendly. I currently have 10 properties that wholesalers have sent me for approximately 100K or less, with an HML you should be able to close on these properties for less than 8K out of pocket. Best wishes for your success.
    Chris Cooper Investor from IL
    Replied 4 days ago
    Another question, if you had investor who could buy property with all cash, would you suggest doing so as long as they have reserve funds for repairs, marketing, etc? When is it smarter to take the loan and expense of that vs doing all cash deals?
    Chris Cooper Investor from IL
    Replied 4 days ago
    Thats interesting, and probably only works when the purchase price is low enough. Isn't the saying something like "you make your money when you buy"? (or something like that). Would paying HML rates for a house near MV price likely eliminate any profits, and I guess that is true of any deal not just HML deals.
    Kathy Kathman from Tacoma, Washington
    Replied 15 days ago
    I'm with you Chris. I live in the Seattle area (south of) and the CHEAPEST run down SF house here is a minimum of $240k and needs tons of work. A run down duplex can be gotten for a little over $300, but not exactly livable (think slum lord) can't go FHA, possibly conv. With 5% down. + MIP makes payments high. Depends on the area of course, but 8k won't work here anymore. I'm lucky in that I bought my first home 11 years ago, it's now a rental and I did buy a duplex where I'm living in the 2nd unit doing a renovation, but needed 20k to get into it.
    Joseph Tineo Real Estate Agent from Birmingham, AL
    Replied 16 days ago
    Great Article! Technically, you could start BRRRRing with $8,000. There are 100% HMLs that don’t require a down payment as long as the deal meets the 70% rule. I’m doing 2 right now and have only had to pay minimal fees(less than $8,000). Once I refi, I’ll have zero cash invested in the deal and I can recycle the fees to use towards the next deal. The BRRRR model is absolutely brilliant.
    Victoria Mick from Long Island, New York
    Replied 15 days ago
    Hi Joseph, I find your post very interesting although since I’m just starting out, a bit confused on how you could buy something with just 8k. Could you perhaps point me to an article or another resource that would explain this in greater detail? Thanks so much!!
    Edilsa LeGrier New to Real Estate from Atlanta
    Replied 15 days ago
    I'm interested in learning how you started a BRRRR with less than $8,000. I've been getting HML that require a large amount of cash in reserves. at least 25% of the purchase price.
    Joseph Tineo Real Estate Agent from Birmingham, AL
    Replied 15 days ago
    All depends on your income, credit worthiness, and your experience. Do you have bank statements or check stubs to prove you can handle the monthly payments? Have you had rentals in the past? Also, currently, I have reserves over 20k, but I didn’t when I started. Reserves can be whole life insurance policies, 60% of your 401K vested balance, CDs, stocks, bonds, mutual funds (not just checking and savings.) Make sure to look for 100% HMLs. If the deal meets the 70% rule and the numbers work, you won’t have to put anything down.
    Jody Hodges New to Real Estate from Bushnell, FL
    Replied 12 days ago
    Joseph, thanks so much for the information relating to HMLs. I'm a newbie but eager to get started. Based on everything I've read thus far, it's difficult to get HML funding without a few flips under one's belt. Have you seen examples to the contrary?
    Cassandra Collins New to Real Estate from Leavenworth, KS
    Replied 13 days ago
    Thanks so much for posting this! Like Victoria, I'm a new investor as well, and getting little tidbits like this to open up new ways of thinking really helps. Thanks!
    Obed NA
    Replied 16 days ago
    Would you mind sharing those HMLs you’ve used ?
    Joseph Chao
    Replied 16 days ago
    Brandon it sounds like option #2 is to become a syndicator/sponsor/general partner in a syndication. Is this correct in assuming?
    Vadim Rey Rental Property Investor from Norfolk, VA
    Replied 11 days ago
    It seems to me Brandon is referring to general joint venture (JV) partnerships where you and a partner or two combine forces into an LLC with an established contract of expectations for the partnership, how you will execute the deal, how you will share the profits, and how you will release each other from obligations under a variety of circumstances (e.g. deal goes bad, deal goes great, everything in between). Syndication partnerships *are* another way to get started and for some folks this is preferred because you can join as a limited partner and be totally passive while earning all the financial benefits of being a real estate investor (assuming you invest with a quality syndication operator/general partner). You can also join as a general partner with little to no money out of pocket while providing sweat equity/mental effort to the deal. In both cases, you get to learn as you go when you partner with the right team!
    Colin Simon Investor from Boulder, Colorado
    Replied 16 days ago
    Step 1: Find flip with $8,000 Step 2: ?????? Step 3: $30k profit Step 4: invest $38k
    Chris Reid
    Replied 16 days ago
    Hey Brandon, I liked the article and there are some nice ideas but I don't think you can accomplish them with only $8,000. How do you flip a house with $8,000? Flipping involves buying and renovating right? $8,000 would barely renovate a room let alone buy a house.
    Jonathan Fernandez
    Replied 16 days ago
    You would have to partner up with someone who has the cash for at least downpayment plus closing costs and be willing to work with you. But as a newbie investor that will be very hard for someone to convince to do since you don’t have the experience and proof that they could go by or trust with. Networking will be the key to bridge that issue, maybe you find a mentor/investor and you tell them what you plan on doing and they help you out learning the ropes and providing the funds to close. You find a great deal and present that to the mentor/investor with you forking the $8,000 for the rehab and you both agree to split the profits after the flip. Now if everything works as planned (which never almost always happen ;) both profits from the deal and you gain a mentor/investor & maybe their investor friends that may fund all your deals provided you impress them and they make a decent return. But this is just a story and not a fairy tale at that. Now up to you to be creative. “If you really want to do something, you’ll find a way. If you don’t you’ll find an excuse.”
    Peter Clapham Rental Property Investor from St. Louis, MO
    Replied 15 days ago
    I think the House Hack is the way to go! You don't need that much, just a clean and affordable place to hang your hat. I just bought a fixer1950 SFR in a working class neighborhood of St Louis (Florissant) for $10,000 on Facebook Marketplace. I'm going to fix it and live in it for a bit learn from repairing it. Everything else in the neighborhood is around $75K and it's original, no aluminum siding salesman or big box upgrades.
    Eduardo Serra
    Replied 15 days ago
    I like this website if I have 100K how much do think that can buy , Can I do a complex apartment??
    Vadim Rey Rental Property Investor from Norfolk, VA
    Replied 11 days ago
    You can absolutely get an apartment complex with 100k! If you buy one by yourself, you'll be limited to about a 350k purchase price in order to account for a 20% down payment as well as having capital reserves to start. If you are willing to invest in a syndication, your 100k could get you an equity share in a much larger deal in the millions of dollars. Just depends on your goals and your strategy!
    Shannon Robnett Developer from Boise, ID
    Replied 11 days ago
    You are 100% correct about the value of multiplication through syndication @Vadim Rey! Its almost like you have done this before!!!! Thanks for sharing your knowledge.
    Richard Dale-Mesaros Investor from Campton, New Hampshire
    Replied 15 days ago
    ......could also just control real estate using a $10 option. I've done 15 or so of these on land and houses....... the least I've made was $2,000, the most was $24,500 after a small amount of time and marketing money finding buyers to whom I assigned my option or did a double closing.......
    Martine Francois
    Replied 14 days ago
    How in the ...did you do that if you don’t mind me asking?
    Joe Chase
    Replied 15 days ago
    I recently bought a 3 bedroom/2 bath double wide with a 2 story pole barn on 1/2 acre lot 2 miles from Finger Lakes for $15000. It does need work but not bad. So it really depends on your location. There are many houses under 75k in upstate NY. You could probably work something out. You wouldn't have much for fixing it up. And would you want to live there? If you want to be a slumlord you could. I never liked that idea.
    Tim W. Specialist from Tampa, FL
    Replied 15 days ago
    Huh, 10 years ago people were mocking me on Bigger Pockets when I was talking about outright buying houses for 8k.
    Luis Martinez
    Replied 15 days ago
    I would like to know more about whoelsaling and finding multi-family units
    Jesse Mancuso Property Manager from Charlotte, NC
    Replied 15 days ago
    This was a great article!
    Martine Francois
    Replied 14 days ago
    I think the best method for me is either the duplex or finding someone like you to help buy it and then up charge. Cause I actually need a place to live in.
    Terre B. from Aurora, Co
    Replied 13 days ago
    Far be it from me to contradict the expert....but this article is an overly simplistic presentation. 1. House hacking. BTDT. MY T-shirt was more of a hospital gown. Out first tenant was a marvelois young man, a student from Montana, here for 2 years while attending trade school. After that lovely experience, our second was another student was a perpetual drink, and the third student refused to pay his rent. When my husband knocked on his door to ask for it, he was attacked. $500K in medical bills later, renting a room didnt seem like such a good idea. We screened all of these carefully. Schools, parents, work references. 2. Marketing. This seems logical, from the viewpoint that you are in a less competitive and local market. But getting started with 10K in Seattle, or LA, or Denver? I hesitate. 3. Flipping. Someone else mentioned viable arguements against. If you cant buy for 8K, I fail to see how you can flip for $8k. This article caught my attention, because I'm sitting on 10K right now. But what you fail to mention is for a first time investor, its not just about having 10K. Its about having the credit score. The income to make the payment while either flipping or BRR. The knowledge of a market to know what upgrades are right for that market to bring max rent. And a lot of other know how that I dont think experienced investors give themselves credit for knowing.
    David Etenburn Investor from Everett, Washington
    Replied 12 days ago
    Brandon, You forgot one option... Buy stock in an REIT. Equity Residential (EQR) is a favorite of mine, going for about $52 a share. 150 shares paying a 4.5% dividend. You can also write a covered call on this stock monthly, offering up 100 of the shares @ $60 ea. and earn another $30 a month or so. ROI? Around 12%. Plus any appreciation in the stock price.