How To Become A Real Estate Investor With No Money

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Real Estate

At the onset, real estate investing sounds like an expensive venture costing thousands of dollars in initial investment. And in the past, it used to be!

Fortunately, you don’t need six figures in the bank to be a real estate investor today. It really starts with a solid financial plan.

Many people who have reached financial independence have done so investing in real estate (in fact, it's one of the most common ways to become a millionaire). This might seem like an impossible achievement if you’re only looking at the end result, but by starting out with small steps and making continued forward progress, you can make your way to “real estate mogul” even if you only have a smaller dollar amount to start investing with.

Today we will discuss how you can get started in real estate investing without breaking the bank, even if you don’t have hundreds of thousands of dollars.

Why You Should Consider Real Estate Investing


The biggest reason you should consider real estate investing is because of the potential for higher returns compared to other asset classes (such as investing in the stock market). In fact, real estate has had an average annual return of 11.42% since 1970. To compare, the S&P500 had an average annual return of 10.31%.

Real estate investing offers leverage over assets, control over the assets, and a substantial profit, if done correctly. You can even invest in real estate while you are still in college! Regardless of when you start, real estate investing is one of the many ways to grow your financial portfolio.

But it's important to remember that comparing real estate to stocks is comparing apples to oranges. While there are some similarities, there are many differences that investors need to realize and understand as well.

Here's what you need to do to get started.

1. Get Educated


The best approach is to learn all that you can with the free resources available for your immediate consumption. You need to learn the basics, but you also have to ask the right questions when presented with information.

While you may be bombarded with images of expensive real estate investment seminars, that is not a requirement to be successful in real estate investing. You can learn the basics from useful free guides online to get a jump start on the basics. There are plenty of real estate books, podcasts, and free information online as a good place to start. You can also speak with other real estate investors.

Here are the main types of properties and investments available for real estate investment. Each type of investment has its own nuances that you should understand before you invest.

Vacant Land
Single Family Homes
Small Multifamily Properties
Large Multifamily Properties
Commercial Real Estate
Mobile Homes
Notes/Paper/Mortgages
Once you learn about the different types of options for the real estate listed above, you will want to think about the one that fits your budget, time, and requirements.

You will also want to learn how to properly evaluate a neighborhood in order to make the best investment. You may not be familiar with the city or locality where you are investing, so you will definitely want to check out how to evaluate the locality or neighborhood you are investing in to make an informed decision.

2. Set Your Goals


After doing your homework, you will have a range of the initial investment you can expect to make in getting started. It's possible to get started with just $1,000 (or even less in some circumstances). But you should also  have a goal and know yourself.

How much risk do you want? How much work do you want to put in?

Write down your goal. Next, reverse-engineer what you need to do to get to that point - what is the initial investment amount required to get started?

Real Estate Investing

3. Find The Cash For Your Down Payment Or Investment

At some point, you are going to come to the realization that you have to put away your disposable income so that you can fund your real estate investing dreams. You can do so even if you earn a meager salary, or even if you are a starving college student. You can do this, and the important thing is to begin with the end goal in mind.

You can raise funds quickly by working on your side hustle or following your new budget.

4. Explore Your Real Estate Investment Options


It is important to understand your options, as some have higher risks and higher investment requirements.

Traditional Real Estate Investing


The first option is in traditional real estate investing, which involves buying rental properties and renting them out to tenants.

Traditional real estate investing is a popular way to grow your wealth, but it also comes with some cons that you should look at before you make the leap.

Traditional real estate investing requires searching dozens of listings and visiting several properties before you decide on the right property suitable for rental purposes.

Aside from that, you will also spend a considerable amount of time searching for tenants, showing the property to tenants, and staging the home when showing the properties to tenants. Maintenance and property management are often overlooked duties that are vital to successful rental real estate investments.

If you decide to purchase the home as an owner occupied home, there is an additional risk where you are responsible for a large mortgage loan on the property with a substantial risk in the event of a decline in the housing market.

While these risks are not enough to turn someone off entirely from traditional real estate investments, you have to know what you are getting yourself into before you make the decision.

 

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