{"id":107369,"date":"2020-07-02T15:05:00","date_gmt":"2020-07-02T21:05:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=107369"},"modified":"2024-02-24T11:59:59","modified_gmt":"2024-02-24T18:59:59","slug":"invest-real-estate-low-no-money-down","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/invest-real-estate-low-no-money-down","title":{"rendered":"How to Invest in Real Estate With Only $1,000"},"content":{"rendered":"<p>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?<\/p>\n<p>I&#8217;m here to tell you there\u00a0<em>are<\/em> paths you can take to start investing with only $1,000\u2014or less.<\/p>\n<h2>Low on Cash but Ready to Invest? Here&#8217;s Where to Start<\/h2>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/39Pwi9eB7r4?wmode=opaque\" width=\"640\" height=\"360\"><\/iframe><\/p>\n<p>You&#8217;re probably not going to find a loan where the bank says, &#8220;Sure, we&#8217;ll take a $1,000 down payment. We won&#8217;t even charge you any extra fees.&#8221;<\/p>\n<p>That&#8217;s not gonna happen. But there are paths that you can take to start investing without a lot of cash. Let&#8217;s call it <a href=\"\/renewsblog\/creative-financing\/\" target=\"_blank\" rel=\"noopener noreferrer\">creative financing<\/a>, because you&#8217;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.<\/p>\n<h3>1. Partner Up<\/h3>\n<p>Find a great deal, and use the deal to attract a partner who can fund it.<\/p>\n<p>Let&#8217;s say there&#8217;s a new real estate investor named Bob. Bob only has a thousand bucks\u2014but he&#8217;s motivated, he&#8217;s excited. He&#8217;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&#8217;s sent out using this thousand bucks).<\/p>\n<p>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.<\/p>\n<p><em><strong>Related:\u00a0<\/strong><a href=\"\/renewsblog\/creative-financing\/\" target=\"_blank\" rel=\"noopener noreferrer\">Creative Financing: 5 Outside-the-Box Tools Savvy Investors Use to Build Wealth<\/a><\/em><\/p>\n<p>Bob brings the deal. The partner brings a down payment\u2014and maybe even the partner brings the ability to get a bank loan if Bob can&#8217;t get the loan. And now they split the profits. We&#8217;ll call it 50\/50.<\/p>\n<p>Now, why would someone agree to put down the whole down payment and then split the deal with Bob? Because Bob <em>has<\/em> the deal. And in today&#8217;s economy, he who has a deal, has the gold. And he who has the gold, gets partners.<\/p>\n<p>It&#8217;s as simple as that.<\/p>\n<h3>2. Find a Hard Money Lender<\/h3>\n<p><a href=\"https:\/\/www.biggerpockets.com\/companies\/hard-money\" target=\"_blank\" rel=\"noopener noreferrer\">Hard money lenders<\/a> will lend up to 100% of the purchase price\u00a0<em>and\u00a0<\/em>up to 100% of the cost of repairs to people like <a href=\"\/renewsblog\/2014\/01\/07\/flipping-houses\/\" target=\"_blank\" rel=\"noopener noreferrer\">house flippers<\/a>.<\/p>\n<p>Here&#8217;s how they typically work: A hard money lender is going to fund up to, let&#8217;s say, 65 to 70% of the after repair value. In other words, they&#8217;ll lend around 70% of whatever the property is going to be worth when it&#8217;s all fixed up.<\/p>\n<p>For instance, say a property could be worth $200K when it&#8217;s fixed up, but it is N.A.S.T.Y.\u2014<em>nasty<\/em>\u2014and needs like 50 grand of work. They&#8217;ll lend 70% of that $200,000 (around $140K).<\/p>\n<p>Alright, so it&#8217;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&#8217;ve got the $140K.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-109362\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/04\/loan-paperwork-2.jpg\" alt=\"Person sitting at a desk signing paperwork with guidance from another person who is pointing at a line item\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/04\/loan-paperwork-2.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/04\/loan-paperwork-2-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<p>It might sound crazy, but it&#8217;s not. House flippers buy nasty properties at those margins all the time.<\/p>\n<p>So Bob fixes it up, sells it for $200K, and clears a nice profit.<\/p>\n<p>Of course, not all hard money lenders are going to fund 100% of everything\u2014even if it&#8217;s a great deal\u2014because they like to see that you have some money invested. It&#8217;s what we call &#8220;skin in the game.&#8221;<\/p>\n<p>But there are companies that will do 100%. Or you know, maybe Bob combines the last technique with this one\u2014he brings in a partner to help supply that skin in the game.<\/p>\n<p>See, it&#8217;s all about thinking creatively. And hey, check out <a href=\"https:\/\/www.biggerpockets.com\/real-estate-companies\/hard-money-lenders\" target=\"_blank\" rel=\"noopener noreferrer\">BiggerPockets.com hard money lender free directory<\/a> to find lenders in your state.<\/p>\n<h3>3. Wholesaling<\/h3>\n<p>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 <a href=\"\/renewsblog\/2015\/01\/31\/ultimate-beginners-guide-real-estate-wholesaling-2\/\" target=\"_blank\" rel=\"noopener noreferrer\">wholesaling<\/a> fee.<\/p>\n<p>Here&#8217;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&#8217;s say, $80,000.<\/p>\n<p>Now, Bob only has $1,000. So instead of buying it, he finds another house flipper\u2014someone looking for a deal\u2014and he agrees to sell the deal to them.<\/p>\n<p>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.<\/p>\n<p>Does that make sense? So, he&#8217;s buying it for the 80. But he&#8217;s selling it right away basically for $90K. He keeps the difference, and now he&#8217;s got 10 grand more to go put into <em>more<\/em> marketing to get <em>more<\/em> good deals that he can wholesale.<\/p>\n<h2>The Bottom Line<\/h2>\n<p>What do all three techniques have in common? They all require finding a great deal. That&#8217;s why I often say knowing how to find a great deal is the most important skill an investor can have. So, learn up!<\/p>\n<p>It&#8217;s also why I teach a class every week\u2014<a href=\"https:\/\/www.biggerpockets.com\/webinars\" target=\"_blank\" rel=\"noopener noreferrer\">a free webinar on BiggerPockets<\/a>\u2014where we walk through how to find deals and run the numbers. We do live together! We&#8217;ve even got an <a href=\"https:\/\/www.biggerpockets.com\/calc\" target=\"_blank\" rel=\"noopener noreferrer\">investment calculator on BiggerPockets<\/a> so you can analyze deals in under five minutes.<\/p>\n<p>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.<\/p>\n<p><a href=\"https:\/\/youtu.be\/39Pwi9eB7r4\" target=\"_blank\" rel=\"noopener noreferrer\">Watch my video above for additional details<\/a> about each technique and to learn more about the one thing they share in common\u2014finding great deals! It&#8217;s the single most important skill an investor can have, and I can help you master it.<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/webinars?utm_source=renewsblog\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-91217\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-01.jpg\" alt=\"\" width=\"700\" height=\"85\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-01.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-01-300x36.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><\/p>\n<p><em>Questions? Comments? Concerns?\u00a0<\/em><\/p>\n<p><strong>Let&#8217;s chat below in the comments.\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Investing in real estate with low or no money down&#8230; Is it just a myth or can it really be done? There are in fact creative techniques you can use to start investing with only $1,000\u2014or less.\u00a0Here&#8217;s how it&#8217;s done. <\/p>\n","protected":false},"author":710,"featured_media":120378,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524],"tags":[],"class_list":["post-107369","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/107369","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/710"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=107369"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/107369\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/120378"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=107369"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=107369"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=107369"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}