How can a young investor with low income make an investment that can become into a passive income?

You've got the time and energy, others may have the money, and not the time or energy. Learn all the benefits of cash flow real estate and then start looking for partners. Show them how it works. Start with friends and family. Be persistent, but not pushy, it may take some time to convince people. 

I would start out by buying a SFH and house hacking. Most people only think of house hacking in terms of buying a multifamily property, but for a lower investment you can get a small SFH. A lot of towns will have grants that are available to low income and/or first time home buyers. See if you qualify for any of those.

If so, you may be able to buy an affordable house and get a roommate or two to help cover the mortgage. Even if you don't qualify for grants, most conventional loans will allow you to pay as little as 5% down. If your roommates pay more than your monthly expenses then you are already on your way to passive income! After a year or two you may be in the position to move on to a new house and repeat the process. 

This is a wonderful way to build up a rental portfolio. 

House hacking could be an option, but it's is not passive. You need to find the deal, go through the financing process, find/screen roommates, deal with house/tenant issues, etc. 

If you want truly passive income you will need money to invest. Without money you should be focusing on how to make money, so then in the future you can invest for passive income. It sounds like you're trying to skip the biggest step (making money), and I don't blame you, it's the most difficult part of the equation. But if you don't win the lottery, inherit millions, or have a professional sports career you're going to have to do some grinding like the rest of us. 

@Carlos Cuervo - Congrats on getting here on BP and asking questions.  The fact you are on here and involved in the community puts you miles ahead of other "investors".

My question is, how "passive" do you want/need to be? You could get into a property for a low downpayment via an FHA loan, and have roommates to offset a large portion of your income (House Hacking). If you do this for a year or two, you could sell, or refinance and take that equity and buy another property, and rent out the remaining room in your previous home. You do that every year or two, rinse and repeat and before you know it, you're THERE. I realize there are many factors that play into this but again...The fact you are on BP researching and asking questions is a great way to mitigate those factors and risks. Good luck and keep us all filled in!

Save your money up and do tons of research in the meantime. House hacking is something that you should look into as you can basically live for free. 

@Blake Edwards thank you very much for the feedback! I appreciate the ideas & will be sure to update the plan I attack. Only question I have left after your great comment is; can a 19 year old with no credit score get a loan?

@Carlos Cuervo I would reach out to a few lenders and ask them what you would need to do in order to qualify for a loan.  They can help give you specific suggestions on what types of things you could do to bolster your lending credibility quickly to get a mortgage and, at the same time, learn about the different mortgage types that might work best for you to acquire your first property. Best of luck. 

@Carlos Cuervo

Save your money, ask your family and friends for seed capital to start out, find a house, don’t over pay, and have an exit strategy. Rinse, wash, repeat. That simple. Raise capital, buy a deal, pull your money out. The challenge is the organ between your ears... don’t let fear dictate your future.

2 simple things.

1, live below your means

2, get debt free

From there just save your excess income and snowball it into investments. 

@Carlos Cuervo Figure out ways to improve your income and a plan for saving a large portion of it and go from there. Most ways to generate passive income start with having the cash to do it. I know this sounds simple, but this is the step most people are not willing to do because it takes some level of sacrifice. 

Also, just to add on to my previous point. Understand that RE is for the most part, not passive investing. Pretty much only REITs and syndications are. Owning rentals, etc absolutely are not passive. You pretty much need to be in REITs or syndications or in stocks somewhere for true passive. Even playing the HML role requires some work.

NNN is nice, until you lose your tenant.

@Carlos Cuervo easiest way is to increase income and decrease expenses

@Carlos Cuervo

Good advice here. I started with bad credit and very little money. I recommend three things to begin. Most of my deals and current income have come by creative means in real estate. Passive opportunities generally come when you are a player in the game, can’t be on the sidelines!

1 Educate yourself: use BP, YouTube, books, meetups, etc

2 open your ears and eyes. Listen for ques when speaking to people. You may find someone dying to get out from under their home ( opportunity)

3 take massive action.

Originally posted by @Carlos Cuervo :

How can a young investor with low income make an investment that can become into a passive income?

I think best move for a young dude is house hacking. You need to take care of the roof over your head and typically don't have much cash as a young buck. So kill two birds with one stone by getting a 2-4 unit property using an FHA loan which only requires 3.5% down. This way you can live in one unit and rent out the rest.

@James Wise thank you! I am currently working on doing just that, only issue is no properties in my area have more then 3 units. Sadly above that is the issue that I can’t find any apartments/condos for sale. How should I approach this situation?

Originally posted by @Carlos Cuervo :

@James Wise thank you! I am currently working on doing just that, only issue is no properties in my area have more then 3 units. Sadly above that is the issue that I can’t find any apartments/condos for sale. How should I approach this situation?

 Buy a 3 unit. These loans are only available on 1-4 unit properties anyway so 3 units is pretty close to the max you'd be allowed to get.

@James Wise so I’d need the First time buyer loan & a mortgage loan as well. All requiring me to have a credit score which I’m in the progress of currently obtaining. Then I need to buy the apartment/condo & get room mates, sound correct?

With little funds you can still get into an FHA loan for 3.5% down. I recommend house hacking if you can. Maybe rent out a room or two to a few friends. Do some renovations as time allows. Every little bit helps. I have a friend that rents a room to another friend for 400 bucks a month. Way cheaper than an apartment and it works for both of them.

If that's not an option maybe you can find someone to partner with you.

Originally posted by @Carlos Cuervo :

@James Wise so I’d need the First time buyer loan & a mortgage loan as well. All requiring me to have a credit score which I’m in the progress of currently obtaining. Then I need to buy the apartment/condo & get room mates, sound correct?

You want to go FHA or even better VA if you're in the military. I believe the credit score requirements are around 550-600.

@James Wise thank you for your advice! I’ll be sure to follow up on my journey!

Being young you have time and energy. Outside of that, what can you buy today and flip tomorrow on a smaller scale outside of real estate? For instance, the sneaker industry re-trade market is huge and some re-sellers make upwards of $250K a year. Find a hustle and move the capital into passive investments. The idea is work hard now for the quick flip but move the proceeds to that slow long game. Once you get going, you will eventually passively invest yourself out of the hustle. 

Happy investing!