Investing in real estate is a tried and true method of generating passive income, building financial stability, and opening doors for future opportunities. If you’re considering investing in real estate, you’re probably already familiar with the benefits. You’re also probably familiar with the seemingly prohibitive upfront costs.

Don’t be fooled.

Real estate investment isn’t just a way for the rich to get richer—you can start investing in property without as much money in the bank as you think.

Keep reading to learn how you can invest in real estate for less.

Cash-In on Your Current Home Equity

If you own property, you have a great financial resource available to use towards your future investment. Since property values generally appreciate, your home is likely worth more than what you owe on your mortgage. You can use capital from your home equity to help finance the purchase of an investment property.

There are two primary methods for capitalizing on your home equity:

Cash-Out Refinance Loans – This type of loan essentially replaces your existing mortgage with a new loan for more money than you owe. You’ll receive the difference in cash, which can be used towards a down payment on an investment property. You’ll most likely need to leave about 20% equity in your current home, meaning you can’t cash-out on the entirety of your home’s market value.

HELOCs – Short for Home Equity Line of Credit, HELOCs are a line of credit that uses the equity you have in your home as collateral. HELOCs are good options for borrowers because they have lower interest rates than many other common types of loans, and interest may be tax-deductible.

Don’t Rule Out Living-In

Living in your investment property will open up several options for low-interest, low down payments loans. Many government-issued mortgages have stipulations that require borrowers to live in their properties, but there are still several ways to utilize these kinds of loans with property investment in mind.

FHA loans can only be used for purchasing primary residences, but they aren’t restricted to single-unit properties. This means you can use an FHA loan to purchase a multi-unit property, which you can then rent out as long as you reside in one of the units.

VA loans also require buyers to live in their property, but much like FHA loans, you can still purchase and rent out a multi-unit property, as long as one of the units is your primary residence. This approach is a great option for areas with strong rental markets. For example, taking out New York or California VA loans can be profitable in the long-run.

Partnerships Can Help Ease the Financial Burden

A real estate partnership is simple—it’s an agreement between two people to invest in real estate together in order to make a profit. Splitting the costs and responsibilities associated with investing in real estate means you don’t have to come up with as much capital. It can also be a great way to learn about the process, especially if you’re partnering with someone who has significant investment experience.

As with any partnership, deciding to invest in real estate with someone is a commitment that requires a high level of trust and confidence. Make sure you’re both clear on strategies, goals, and responsibilities before you decide to proceed.

Focus on Your Credit

Maintaining good credit can make a world of difference when it comes to investing in real estate without a lot of cash at your disposal.

A good credit score can provide:

●       A speedier loan approval process

●       Better interest rates

●       More advantageous loan terms

●       More confidence from lenders

Improving your credit score can take time, but it’s worth focusing on even if it means having to delay starting the investment process.

You’re Ready to Get Resourceful

Investing in real estate without a lot of money is more difficult than investing with an unlimited budget. However, you’re a resourceful investor, and investing on a budget is a challenge you’ll be glad you took on. With the right tools, knowledge, and resources, you’ll be on your way to reaping the benefits that investment properties can provide. Before you know it, your days of working without access to tons of capital will be behind you!