How do I start out in investing in real estate? Are my ideas good?

12 Replies

I know investing in real estate takes determination and time. I am 20 years old in college and majoring in Law. I work and go to school but I am determined to invest in real estate on the side. So to start off I was thinking of buying somewhat run down, cheap property from a seller rather than from a real estate company, whether its a duplex or one level home... and fixing/re-modeling it a bit, then either selling it for profit OR renting it out right away. Is this a good idea?

My issue here is that I do not have thousands of dollars to buy a house; I am a broke college student, working by pay checks. I was thinking of these steps..... AND I need help of what you guys think....

1) finding a cheap home or duplex, price below the market price; buying from a desperate seller. (ex: seller wants to sell for $85,000)

2) I go take a look at the property and it needs a lot of work done! so I make a deal willing to pay $45,000. lets hope the seller sells for that much since he is desperate to get rid of it.

3) I get a bank loan for 45,000 since I cannot pay the house right off the bat. So the bank lends me 45,000 and I pay the seller so we do not have to deal with each other again after this deal... We both win, seller has SOLD the property and now I OWN it so we're both happy right?

4) Now I move in the home, living rent free but have to pay off the loan of 45,000, making monthly payments while remodeling. Will I be spending a lot of money paying off the loan plus remodeling? Yes! Will it be worth it later? I REALLY hope so!

5) Wow the house looks good now; fixing the house nicely was quick! but I am still paying off the loan... so lets rent it out.. looking for a serious renter.

6) I found a renter who will pay 1,300 a month which will help me pay off my bank loan and utilities. Once the loan is paid off, renter continues to rent and who gets profit?.....

ME!!! .... then I would continue of doing this in a manageable manner.

BUT.... I have a problem.

I have no/bad credit so how will I be able to get a bank loan. Don't they check your credit?

Are there any other ways of investing? This is just what I am imagining that may work.

I need opinions on this!!


I would only make this suggestion as a last resort... you could get a hard money loan to fund your transaction. Most hard money lenders don't really look at your credit and they fund the purchase and rehab cost of your property. However, the interest rates are high and the length of your loan would be shorter than a traditional loan, but they do provide funds when you can't get bank funding. They will fund up to 70% LTV so be sure you have a property with the equity in it.

Hope this helped and best of luck to you!


You may want to consider purchasing a multi family primary residence that just needs some cosmetic updating. It will give you some income in the meantime while finding good contractors with a fair price (which is the hardest part in My optinion). You can get a real feel for the business and need little out of pocket expenses if going FHA.

@Monica Zakaria  What are your goals? Do you want to achieve cash or cash flow? You have the basic concepts somewhat right, but just need a little more understanding on your numbers.

My suggestion would be to look into wholesaling. For the actual wholesale transaction, you do not need much cash or credit. 

With any investment strategy that you choose, your goal is to find motivated sellers. In your example, you stated someone has a home valued or asking for $85k, but you were able to get it for $45k. This would most likely be a motivated seller, as the average person selling on the MLS may not go this low. If you are able to find someone to sell a $85k property for $45k, some options could be to partner with an experienced investor and have them flip it, while splitting the profits or wholesaling the contract.

As an investor, your goal is to find sellers that NEED to sell. If you can find a real deal, the money will not be hard to find. Finding those sellers is going to take some work and persistence, but it will be worth it when it comes along. If it was that easy, everyone would be doing it. 

Read around the forums, watch Youtube videos and listen to podcast and you'll expedite your learning much quicker.

Best of luck,


Hi Monica, getting started is tough, but one of the first things I would do if I was in your position would be to go to a bank or a mortgage broker and see if you could get a loan, and if so, what type and how much. Without knowing, it's like shooting a gun without knowing how many bullets you have. 

Next, I second @George Makakaufaki   idea to start by wholesaling. Another thing you could do, is to go to a RE club meeting in your area and find cash or credit partners to do your first deal. Often the value in these partners is not only their cash or credit, but the knowledge that they have. 

If homes in your area is $85K, it shouldn't be too hard to find someone who is willing to take a chance and work with you if the deal is sweet enough and the partnership is clean.

@Monica Zakaria

My suggestion. See if you can find an affordable apartment in the college town. Often these are for sale preferably 3-4 rooms. Rent the other three rooms out. This will give you a taste of property management and real estate ownership. If you cant afford the downpayment find an investor and give them a return on their investment (part of your cash flow).

Good luck!

@Monica Zakaria    You state you have "no/bad credit".  Of course you can't have "no credit".  What exactly is your credit score, and credit situation?  Are you working to improve it?  Many people can whip their credit into shape inside of 6 months, so they can purchase a primary residence through a program that allows for "mediocre credit".

While you could search out a hard money loan, seller financing, try to assume a mortgage, try to wholesale, or pursue many other angles, I would not recommend these for people new to the game.  They can be risky, complex, frustrating.

If you aren't sure the steps to improve your credit, I recommend the folks at  It will cost you some money but they'll set you up with a personal coach and get you on a plan to straighten things out.  I have no affiliation other then knowing a few satisfied customers there.  If you don't want to go that route, share your credit details with the fine folks at biggerpockets, and we can probably help guide you as well.

You also mentioned getting a bank loan for $45k, for a $45k purchase price.  You'll need to put some money down, and need some money for closing costs, money for rehab, some money in reserves, etc.  I think it would make sense to make a plan, perhaps a 6 month plan, to save some money and get your credit in order.



Monica, I admire your ambition. Educate yourself and know that if you stick with it you will be very successful. There is a beginners guide here on bp and there are podcasts with people having success with various strategies. 

An idea would be to bring value to someone having success in your area. Find deals, intern, work for, or whatever to help them and you will learn and grow in this business. A track record and connections would help you to get financing for a rehab project like the one you described.

@Monica Zakaria I have a different suggestion for you. If you want to get into rentals and do the property management yourself you can network with a local property manager or Multifamily investor. Either open the phone book and start dialing (more likely do a Google search) or a way better way to go would be to attend some local REIA (Real Estate Investment Club meetings and find a property manager to work for.  

If you work hard enough you could probably find a way to trade rent for work.  This will also give you an upfront and on the ground education on mult-family investment and how to successfully manage properties. If things go really well you might be able to partner with them on future deals.  

How about an FHA loan (only 3.5% down) on an owner occupied duplex where one side allows you to live mortgage/rent free. This would allow you save money and purchase additional property.

Only issue with this is you are stuck with PMI for the life of the loan.

I wonder if you could do a "kiddie condo" FHA loan and use the credit and income of your parents or guardians to get your first purchase. This loan will go up to a quad. Here in Tallahassee we have a lot of students (3 major colleges) so we utilize this a lot for parents buying for their growing students moving off campus. Typically parents here have gotten 3 to 4 room townhouses where they rented rooms to roommates so I haven't done it on duplex or quads. Worth checkin out

Step 1) Education. Read everything you can on Bigger Pockets. Add keyword alerts to your profile for the types of investments or strategies that interest you. Sign up for the Bigger Pockets newsletter. Listen to all the past BP podcasts and catch up to the latest ones. Read the books that the podcast guests suggest.

Step 2) While you save up a downpayment, get your credit into good enough shape to qualify for an FHA loan on a duplex. As an owner-occupant your down payment will be very small. Live in one side and rent the other out. Maybe try to find a 2-3 bedroom and also rent one of the bedrooms on "your" side to a roommate. That will allow you to live for free, continue improving your credit, and practice landlording. Another option to try first or in conjunction with the duplex idea is to figure out how to wholesale and build up cash that way in order to fund future buy & hold or future flips.

Good luck!

@Monica Zakaria   I started when I was 19 but it was not my choice necessarily. So I never discount youth as a barrier to entry.

My sincere recommendation based on your analysis in your first thread is to get a job that in Real Estate investing that allows you to touch multiple areas of the "sport." Get comfortable with the lingo, the finance side, and most of all, the ways that you can participate in this business. You don't have to be a landlord. Start listening to the BP podcasts - they are pure gold! Attend local real estate investment associations and just start talking to people about what you are trying to do. You might land a job as a part time assistant to a big dog in the industry and you will learn a ton. 

Since you have plenty of time to figure it all out, i would go slow and let this opportunity unfold naturally. Hopefully you can land a mentor too.

Good luck! We were all beginners once but remember that we are all always learning too.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here