Do You Need a Lot of Money to Invest in Real Estate?
The traditional image of real estate investing — buying a rental property outright — requires significant capital. But that’s not the only way to get exposure to real estate. Several options let you start with as little as a few hundred dollars or even less.
Option 1: REITs (Real Estate Investment Trusts)
A REIT is a company that owns income-producing real estate — office buildings, apartments, shopping centers, warehouses, or medical facilities. REITs are required by law to distribute at least 90% of their taxable income to shareholders as dividends.
You can buy publicly traded REIT shares through any brokerage account just like stocks. Many trade for under $50 per share. REIT ETFs (such as VNQ from Vanguard) give you diversified exposure across hundreds of properties for the cost of a single share.
REITs are the easiest, lowest-cost way to add real estate exposure to your portfolio without becoming a landlord.
Option 2: Real Estate Crowdfunding Platforms
Platforms like Fundrise and RealtyMogul pool money from individual investors to fund real estate projects — residential developments, commercial properties, or debt financing on real estate deals.
Fundrise has a $10 minimum to get started and offers non-traded REITs structured for long-term investors. These are less liquid than publicly traded REITs but often target higher returns.
Some platforms are limited to accredited investors (those with income over $200,000 or net worth over $1 million). Others like Fundrise are open to everyone.
Option 3: House Hacking
House hacking means buying a multi-unit property, living in one unit, and renting out the others. The rental income offsets your mortgage payment — sometimes enough to live nearly free while building equity.
FHA loans allow you to purchase a primary residence with as little as 3.5% down, and multi-unit properties (up to 4 units) qualify as primary residences if you live in one unit. This means you can get into a duplex or triplex for a fraction of what a standard investment property would require.
Option 4: Buy a Rental Property with a Low-Down-Payment Loan
Conventional investment property loans typically require 15% to 25% down. But if you buy a property as your primary residence and later move out and rent it — a legal strategy called “live-in then rent” — you can use a conventional 3% to 5% down mortgage for your initial purchase.
This approach requires you to live in the property for at least 12 months, but it significantly reduces the upfront capital requirement.
Option 5: Real Estate Partnerships
Partnering with someone who has capital but lacks the time, or with someone who has operational experience while you contribute equity, is a common way to get into deals you couldn’t fund alone.
Partnership structures vary — some are 50/50 equity splits, others are structured as investor/operator deals where one party funds and the other manages. Any partnership should have a written operating agreement before money changes hands.
What to Consider Before Investing in Real Estate
- Liquidity — real estate is illiquid compared to stocks. Selling a property takes months and costs 6% to 8% in transaction fees
- Management burden — owning rental property requires dealing with tenants, maintenance, and vacancies
- Leverage risk — mortgages amplify both gains and losses
- Local market knowledge — real estate returns vary enormously by location
REITs and crowdfunding platforms remove the operational burden. Direct ownership creates more control but requires more work.
Bottom Line
You don’t need hundreds of thousands of dollars to invest in real estate. REITs offer the lowest barrier to entry and highest liquidity. Crowdfunding platforms offer private real estate deals at low minimums. House hacking and low-down-payment loans are viable paths to owning rental property directly with limited capital. The right approach depends on your risk tolerance, time availability, and how hands-on you want to be.