Mortgages & Creative Financing

How to Invest in Real Estate With Only $1,000

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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Usually, if something seems too good to be true, it is. But what about investing in real estate with low or no money down? Is it just a myth or can it really be done?

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I’m here to tell you there are paths you can take to start investing with only $1,000—or less.

Low on Cash but Ready to Invest? Here’s Where to Start

You're probably not going to find a loan where the bank says, "Sure, we'll take a $1,000 down payment. We won't even charge you any extra fees."

That’s not gonna happen. But there are paths that you can take to start investing without a lot of cash. Let’s call it creative financing, because you’re going to replace all of that cash you normally would need with a creative method instead. Let me give you a few good places to start.

1. Partner Up

Find a great deal, and use the deal to attract a partner who can fund it.

Let's say there's a new real estate investor named Bob. Bob only has a thousand bucks—but he's motivated, he's excited. He's dedicated to getting started making passive income. So Bob finds a great real estate deal from someone who responds to his marketing (maybe a Craigslist ad or a letter he's sent out using this thousand bucks).

Then, because $1,000 is not going to be enough to get the deal through a traditional bank on his own, he finds a partner who can bring the down payment needed.

Related: Creative Financing: 5 Outside-the-Box Tools Savvy Investors Use to Build Wealth

Bob brings the deal. The partner brings a down payment—and maybe even the partner brings the ability to get a bank loan if Bob can’t get the loan. And now they split the profits. We’ll call it 50/50.

Now, why would someone agree to put down the whole down payment and then split the deal with Bob? Because Bob has the deal. And in today’s economy, he who has a deal, has the gold. And he who has the gold, gets partners.

It’s as simple as that.

2. Find a Hard Money Lender

Hard money lenders will lend up to 100% of the purchase price and up to 100% of the cost of repairs to people like house flippers.

Here's how they typically work: A hard money lender is going to fund up to, let's say, 65 to 70% of the after repair value. In other words, they'll lend around 70% of whatever the property is going to be worth when it's all fixed up.

For instance, say a property could be worth $200K when it’s fixed up, but it is N.A.S.T.Y.—nasty—and needs like 50 grand of work. They’ll lend 70% of that $200,000 (around $140K).

Alright, so it’s their friend Bob who happens to find this nasty property, and he gets it under contract for $80K. Now he could potentially get the hard money lender to fund the entire purchase and the rehab, because they’ve got the $140K.

Person sitting at a desk signing paperwork with guidance from another person who is pointing at a line item

It might sound crazy, but it’s not. House flippers buy nasty properties at those margins all the time.

So Bob fixes it up, sells it for $200K, and clears a nice profit.

Of course, not all hard money lenders are going to fund 100% of everything—even if it’s a great deal—because they like to see that you have some money invested. It’s what we call “skin in the game.”

But there are companies that will do 100%. Or you know, maybe Bob combines the last technique with this one—he brings in a partner to help supply that skin in the game.

See, it’s all about thinking creatively. And hey, check out BiggerPockets.com hard money lender free directory to find lenders in your state.

3. Wholesaling

Put simply, wholesaling involves finding a great deal, signing a purchase and sale agreement with the seller, finding someone else looking for a deal, and agreeing to sell your deal to them for a wholesaling fee.

Here’s an example with Bob. Bob finds a great real estate deal from someone who responds to his marketing (like we talked about earlier). Bob and the seller sign a purchase and sale agreement for, let’s say, $80,000.

Now, Bob only has $1,000. So instead of buying it, he finds another house flipper—someone looking for a deal—and he agrees to sell the deal to them.

To be sure, there are some state-specific legal rules that need to be followed when doing wholesaling. But the gist is this: The house flipper pays $90K for the deal. The seller (the original seller), they get their $80K. And Bob keeps the $10,000 difference as his wholesale fee.

Does that make sense? So, he’s buying it for the 80. But he’s selling it right away basically for $90K. He keeps the difference, and now he’s got 10 grand more to go put into more marketing to get more good deals that he can wholesale.

The Bottom Line

What do all three techniques have in common? They all require finding a great deal. That’s why I often say knowing how to find a great deal is the most important skill an investor can have. So, learn up!

It’s also why I teach a class every week—a free webinar on BiggerPockets—where we walk through how to find deals and run the numbers. We do live together! We’ve even got an investment calculator on BiggerPockets so you can analyze deals in under five minutes.

All right. So those are three ways somebody can get started investing in real estate with a thousand bucks. Is it easy? No. Is it worth it? Definitely.

Watch my video above for additional details about each technique and to learn more about the one thing they share in common—finding great deals! It’s the single most important skill an investor can have, and I can help you master it.

Questions? Comments? Concerns? 

Let’s chat below in the comments. 

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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    Sedriah F. from Charleston, SC
    Replied almost 2 years ago
    @BrandonTurner, on number 1, when partnering up how do you structure the deal. Did you just write up an agreement with them and have it notarized with the terms or do you set up a LLC with them? Since I am new to flipping I’m looking at partnering up and using HML but don’t know how to partner up correctly.
    James Rodgers Financial Advisor from Charlotte, NC
    Replied almost 2 years ago
    One idea I have come across is peer to peer lending. After doing some research, it seems it’s a workable strategy for getting the upfront cash for rehabs. Is it possible, or advisable, to use something like peer to peer lending to buy, let’s say, a tax deed or foreclosed property? This is something I thought of while reading some blig posts and listening to one of the podcasts. Any feedback on this question would be appreciated!
    Cameron Rockwell Rental Property Investor from Virginia Beach, VA
    Replied 7 months ago
    Hey James, I actually currently do this to fund deals with a hard money lender. I just made a poster and a little FAQs that I give to peers when talking about money. Most of the time they are very interested and love the idea of passively investing in real estate in a more secure way. I do this buy giving them a promissory note for a specific property we are hard money lending on for say an 8% annualized interest rate. Since I do all the payout inspections for the hard money lender I take some pictures and send them to an investment group email I made about the progress of the flip. People love this because they get to see all the progress and it makes them feel like they are really giving back to the community. I even give them a tour of the completed property if that is what they would like to do. I have currently raised about 25k but I am just getting started.
    Frank S. Specialist from Chicago, IL
    Replied 11 months ago
    Hype is very strong these days.
    Nicholas Myler Rental Property Investor from Dallas, TX
    Replied 11 months ago
    Those all sound like great ideas but they seem like a bit of a stretch. And with only the $1,000 to throw in I'd say you'd have to be pretty lucky to score any of those deals. What if you could invest that same $1,000 completely hands-off and collect a 3 - 12% rate of return? This is what real estate investing apps like Tellus are doing so that investors can do a lot more with smaller sums of cash.
    Account Closed
    Replied 11 months ago
    Great post, thank you very much. I am currently reading one of your books!
    Tom Wilson from Saratoga, California
    Replied 10 months ago
    Partner up, that's what even we help investors with. Thanks for sharing this, Brandon.
    Brian Gibbons Investor from Sherman Oaks, CA
    Replied 9 months ago
    Lease Option Assignments can be started with $1000. 1. Get a Lease Purchase (seller) agreement, and Lease and separate option agreement. 2. Find expired listings and FSBOs 3. Show them (Owners) the benefits of selling on LO, sign a letter of intent to lease purchase and assign the deal 4. Market the property with signs and Cragslist and facebook 5. Qualify the tenant buyers (DTI and job and 3% down) 6. Get the TBers to write a check to a closing company or attorney for a) first and last months rent and b) option fee of 3% of purchase price 7. Get the paperwork first signed and notarized with first the TBer in the attorney's office with 2 checks, and second with the Owner notarized. 8. Outcome is this a) Seller gets market rent, full price down the road, someone who will care for the house and wants to own it b) TBer gets a home now, right neighborhood and schools, and a plan to own c) REI gets 3% to put the deal together. My favorite areas are where rent for middle class 3-4 bedrooms cover PITI on a home loan. For example, Ohio, PA, IN, etc. Nice article Brandon!
    David Etenburn Investor from Everett, Washington
    Replied 6 months ago
    You forgot one pretty passive option: REITs. Real Estate Investment Trusts typically pay sizeable dividends, and for the most part, they do appreciate along they way. One of my favorites has been Equity Residential (EQR). Wait for it to drop below $58, get 16 shares for your $1000, and you’ll have decent cash flow plus some appreciation that keeps up with inflation.
    Daniel B Bennett from Jonesboro, Arkansas
    Replied 6 months ago
    I have 5 rentals and they are doing well but I am beginning to have some concerns about the not-too-distant future. Does anyone here think that at some point owning rental property will become illegal, or that a woke social justice government will decide that rental property owners ( who are presumably "rich") should have to give their houses to their renters (who are presumed to be "poor") because "it's the right thing to do"?