How Much Money Do You Really Need to Invest in Real Estate?

One of the biggest myths about real estate investing is that you need to be wealthy to get started. While money certainly helps, it’s not always a barrier. Many successful investors started with modest means and used creative strategies to build their portfolios. So, how much money do you need to begin? Let’s break it down.

Understanding the Costs

There are several costs to consider when purchasing your first investment property:

1. Down Payment

Traditional loans typically require 20–25% down.

FHA loans can allow as little as 3.5% down, but usually require owner-occupancy for at least one year (perfect for house hacking).

Conventional investment property loans typically require a 15% down payment.

Example: A $150,000 property might require an upfront payment of $5,250 (FHA) to $30,000 (20%) of the purchase price.

2. Closing Costs

Plan for 2–5% of the purchase price, which can include:

Title fees

Attorney fees

Lender fees

Taxes and insurance

Tip: You can sometimes negotiate to have the seller cover some of these costs.

3. Reserves & Emergency Fund

Lenders often require 2–6 months of mortgage payments in reserves for investment properties. Additionally, always budget for unexpected repairs and vacancies.

Recommended reserve: $5,000–$10,000 for beginners.

4. Repairs & Renovations

The condition of the property matters. A turnkey property may need little to nothing. A fixer-upper could require thousands.

Start safe: Avoid major rehabs on your first deal unless you have experience or a trusted contractor.

Low-Capital Strategies to Get Started

If you don’t have $30,000 sitting in the bank, don’t worry. Here are some ways new investors are getting started with less:

🏠 House Hacking

Buy a multifamily property (2–4 units), live in one unit, rent out the others. Use an FHA loan with 3.5% down.

🏘️ Partnering with Others

Team up with someone who has capital. You bring the hustle, they bring the funds. Split profits or form a joint venture.

💵 Seller Financing

Negotiate directly with the seller to make monthly payments instead of using a bank.

🔁 BRRRR Method

Buy, Rehab, Rent, Refinance, Repeat. This method allows you to pull your cash back out and reinvest—if done right.

🔄 Real Estate Wholesaling

Find off-market deals and assign them to other investors for a fee—requires little or no capital but strong hustle and negotiation skills.