How to Invest in Real Estate with Minimal Upfront Costs

Investing in real estate is one of the best ways to grow your income and net worth. In fact, Forbes labeled real estate ownership as a better indicator of future wealth than education, industry, and personal income. However, many people think that real estate investing has to require a large sum of money upfront. With the right strategy, however, it’s possible to invest in real estate with limited upfront capital and risk. Take a look at some of these effective ways to invest when your cash is tied up in other assets.

Co-ownership

Younger individuals often do not invest in real estate given the upfront costs, but many do not realize they can access homeownership more quickly if they buy with a group! As long as you solidify terms and conditions upfront with your partners, co-ownership can be a safe and easy way to own from an earlier age.

Did you know Keyturn can help you co-invest in short-term rentals with friends, family, or other investors? Once you’re ready to make an offer, Keyturn will help you set up an LLC for individuals or groups, connect you to lending partners, and support you during negotiations and closing. Learn more about Keyturn’s purchasing solutions here and how you can start building wealth from a younger age.

Alternative Loan Strategies

Given high rates in the market, some buyers have taken different approaches to securing loans on their property to stay cash-flow positive. For instance, seller financing can include a property owner financing the purchase for the buyer. The buyer makes monthly payments to the property owner, who acts as the lender. This strategy allows buyers an alternative to obtaining a traditional mortgage and can be a win-win if done well, since the seller can generate a passive income while the buyer can acquire a property with minimal upfront costs.

However, relying on an individual for your loan can be a scary proposition. Instead, many short-term rental owners are leveraging projected or current Airbnb income to secure loans from direct lending partners. This way, Airbnb owners can buy properties more frequently even when cash reserves are lower. Want to learn more about how Keyturn's lending partners can help you secure a loan based on short-term rental income? Talk to us today.

Property arbitrage

Arbitraging properties is taking over a lease then re-leasing as quickly as possible to exploit differences in pricing or information. A popular example of this is house flipping, where an investor buys a property then rapidly increases rental or purchase value through additions, renovations, and more. The upside for this method is lower upfront cash needed to secure a property. However, it takes a lot of real estate experience to ensure that you'll be able to profit; nothing is worse than being stuck in a lease where there's only downside! If you have this experience and want to grow your business, arbitrage projects can be highly profitable - if done in the right way.

Crowdfunding

This is a relatively new way to invest and diversify your real estate portfolio. Crowdfunding platforms allow individuals to pool their funds together to invest in real estate projects, putting as little down as $10 to $5,000 upfront respectively. These platforms typically charge a fee for their services, however, but can provide a convenient and accessible way for investors to participate in real estate investing. 

Housing Hacking

House hacking is a strategy that involves living in one part of a property while renting out the other parts. This method is a great way to generate income from a property while reducing your living expenses. You can purchase a duplex or a multi-family property while renting out the other units to cover your mortgage payment. In some areas, you can also rent out individual rooms as long as you're okay with others taking up space alongside you. This can help you build equity and generate cash flow to cover your living expenses! 

Investing in real estate with little to no money down is possible with the right strategy. By utilizing one or more of the above methods, you can build wealth through real estate without breaking the bank and grow your portfolio faster than ever before.

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