How to invest in real estate with no money down

Real estate can be a smart and lucrative investment. And while the most common way to invest in real estate is to buy your primary residence, you can also invest in other properties to rent out and earn revenue.

Buying property typically requires you to come up with enough money to cover a down payment and closing costs, but there are other ways to invest in real estate without paying a large sum of money up-front. We’ve rounded up some alternative real estate investing strategies that require little to no money to get started.

Understanding real estate investing basics

When you buy a home, you build equity with each mortgage payment you make. However, you’ll typically need to make at least a 3% down payment and pay closing costs that can range anywhere from 3% – 6% of the purchase price.¹

If you buy an investment property and rent it out, you can build equity while also earning rental income. The downside is that rental properties also usually require paying closing costs and an even larger down payment of 15% – 25%.

The good news is that there are other ways to invest in real estate that don’t require you to put that much money down up-front.

What ‘no money’ really means

Investing in real estate with “no money” doesn’t mean investing without any costs or financial risk. What it really means is using little of your own money for up-front costs and instead relying on financing, business partners, or other investment capital that don’t require you buying a property yourself.

In fact, even a no-money-down purchase might still involve closing costs, repairs, insurance, taxes, or loan payments. So, it’s important to do ample research and consider all potential costs of an investment.

Active vs. passive ways to invest

It’s also important to decide which kind of investor you’d like to be. Active investing means hands-on involvement. This can take the form of managing rentals, finding properties, managing transactions, and more.

Passive investing is more like buying stock or investing in a business. Good examples of this are REITs (real estate investment trusts) and real estate exchange-traded funds (ETFs). A REIT is a company that owns and usually operates income-producing real estate. A real estate ETF is made up of stocks in companies in the real estate sector.

10 creative real estate investment tactics that require little to no money down

If you’re looking to get into real estate investing without draining your savings, here are some alternative options to consider.

1. Utilize seller financing

With seller financing, often called owner financing, you borrow from the seller instead of taking a loan out from a lender. Instead of taking out a traditional mortgage from a lender, you make monthly payments to the seller. Once you’ve paid off the full amount, ownership of the property will be transferred from the seller to your name.

Seller financing can be a helpful option if you don’t have enough saved to make a down payment or cover your closing costs. This can also allow you to buy a home if your credit score doesn’t allow you to qualify for a mortgage.

There can also be downsides to seller financing, like fewer protections for the buyer since there’s no lender setting the terms of the deal. You may want to get advice from a real estate attorney or other expert before entering a deal using seller financing.

2. Tap into home equity   

As you pay down your loan principal, you build equity. You can calculate your equity by taking your home’s current market value and subtracting the amount you still owe on the mortgage. Once you’ve built enough equity, you can use it as collateral to borrow money.

One way to borrow against your equity is through a second mortgage, either as a home equity loan or home equity line of credit (HELOC). A home equity loan comes as a lump sum, while a HELOC is a line of credit you can borrow against more than once as needed. (Rocket Mortgage offers home equity loans, but doesn’t offer HELOCs at this time.)²

If a second mortgage feels too risky, you could do a cash-out refinance. With this option, you pay off your mortgage with money from a new, larger loan and withdraw the difference in cash. Suppose you still owe $200,000 on your mortgage, and you need $25,000 to cover the down payment and closing costs on an investment property. You could do a cash-out refinance for $225,000 to make that happen. While you won’t have a second monthly payment to make, you’ll be increasing the amount you owe, which can result in higher monthly payments.

3. Consider live-where-you-rent strategies

Live-where-you-rent, also known as house hacking, is when you purchase a multi-unit property, then live in one unit and rent out the others. If the property has four or fewer units and will be your primary residence, this allows you to purchase a rental property with a residential loan. The income you generate from renting out the other units can cover the mortgage, so you can potentially live rent-free and build equity.

However, becoming a landlord comes with additional responsibilities. You’ll have to find tenants, manage the property, and cover maintenance and repairs. If there are vacancies, you’ll lose out on that income and will have to cover the difference in the mortgage.

4. Invest in real estate investment trusts (REITs)

A real estate investment trust (REIT) is a company that owns and operates residential and commercial properties and rents them out. When you invest in a REIT, you become a partial owner, and the REIT pays out the income it generates to its investors as dividends. REITs can be an accessible way for new investors to earn money from real estate because you don’t have to buy or manage a property yourself. It’s also possible to invest small amounts, even as little as a single share.

There are other types of REITs as well. Mortgage REITs, or mREITs, are investments in purchased or originated mortgages and mortgage-backed securities (MBSs), which are a type of bond that investors can buy through the bond market. People who invest in mortgages can choose to back commercial or residential mortgages. Individuals can buy shares in an mREIT, which would be listed on major stock exchanges.

According to a 2026 study from CEM Benchmarking, REITs have an average annual return of 9.72% over a 26-year period. REITs are typically publicly traded on stock exchanges, so you’re able to buy and sell shares as you go. However, this also means that they are affected by market volatility. You’ll also be taxed on the dividends.

5. Form an equity partnership

Equity partnerships are a way you can pool your resources together with other real estate investors to buy commercial property and earn revenue. Together, you can share the upfront costs of purchasing property, rent it out, and earn money from appreciation. Equity partnerships let you share responsibilities, costs, and risk, but also mean you have to share profits, decisions, and liabilities.

There are two main types of equity partnerships:

• General partnerships. Each partner has equal ownership and shares responsibilities, decision-making, and unlimited liability.
• Limited partnership. General partners have management authority and unlimited liability, while limited partners are passive investors with limited liability.

Because equity partnerships require you to work together with other partners, it’s important to work with a real estate attorney when you form the agreement. An attorney can help you set the structure, terms, and expectations of the partnership to help mitigate potential conflict.

6. Bring in a co-borrower

Bringing in a co-borrower can potentially help you qualify for financing by adding income, creditworthiness, and assets. The right co-borrower could help with a down payment or closing costs.

However, remember that, essentially, you’re going into business with this person. So you want to agree up-front on who’s responsible for what, including ownership percentages, rental income distribution, mortgage payments, and more.

7. Consider real estate syndications

Real estate syndications are pools of investors who combine resources to buy larger investment properties. Usually, there’s a sponsor, also known as the general partner, who identifies properties and manages them once purchased. There are also investors, or limited partners, who provide the capital to buy the properties and enjoy a cut of the profits. Certain rules and regulations apply to real estate syndicates.

8. Leverage private money lenders

Private money lenders are private organizations or individuals that offer loans outside of the traditional banking system. You can use a private money loan to buy a rental house, Airbnb property, or investment property. These types of loans can be beneficial to borrowers who don’t meet the eligibility requirements set by traditional lenders.

The downside is that private money loans often come with higher interest rates and additional fees. Private money loans can be risky if you don’t thoroughly research the lender. Be sure to carefully review the loan agreement and understand all the terms fully so you don’t end up with a loan you can’t repay.

9. Explore hard-money lending options

A hard-money loan is a loan issued by a private lender that lets you use your home as collateral to borrow money. Hard-money loans come with shorter repayment periods. You only need to pay interest during the repayment period, but then you’ll need to make a balloon payment once your loan is due.

Hard-money loans typically come with higher interest rates, typically 10% to 18%, and higher down payment requirements – often 20% to 35%. These loans have higher upfront costs but are used by investors looking to flip a property and are confident they’ll be able to sell it by the time the loan is due.

If you decide to try to use a hard-money loan to flip a property, it’s important you know you’ll be able to sell the property relatively quickly to repay the lender. If you can’t repay the loan, you could risk losing your primary residence.

Some house flippers use the 70% rule, which suggests that the purchase price shouldn’t be more than 70% of the after-repair value (ARV) of the property. The idea is that this will leave enough room for a profit when the house is sold. Buying a fixer-upper has pros and cons, and can be stressful and full of surprises, so investors should proceed with caution and connect with real estate market experts before buying a property.

10. Explore real estate crowdfunding platforms

Real estate crowdfunding platforms are another way investors can pool their money together to invest in commercial real estate. Platforms like Fundrise, Realty Mogul, and Concreit can help you get started in real estate investing with little upfront cost and allow you to diversify your portfolio. These investing opportunities also come with less risk and responsibility because you aren’t taking on a mortgage and are sharing the cost with others.

Keep in mind there is always additional risk when you share your investment with strangers.

Other creative strategies

If none of the above options are for you, there are still other ways to get started in real estate investing. Here are three options.

Try rent-to-own

Some property owners are willing to rent a property with the option to purchase it later at a predetermined price, also known as rent-to-own. Some investors also build homes with the goal of renting them out. These are known as build-to-rent (B2R) homes or build-for-rent (BFR) properties.

Assume the seller’s mortgage

An assumable mortgage allows you to buy a home by taking over the seller’s loan with the same interest rate and terms, potentially with no money down. Conventional loans are not assumable, but government-backed loans typically are assumable.

Use government-backed loans

Because these loans are backed by the government, lenders offer looser eligibility requirements. VA loans and USDA loans do not require a down payment, but they still have closing costs, credit requirements, and are only available to certain borrowers. VA loans are offered to eligible military servicemembers, veterans, and their surviving spouses. FHA loans have lower down payment requirements if you meet their conditions.^{3, 4}

How to choose the right no-money real estate strategy

The best approach to how to invest in real estate with no money depends on the investor’s finances, goals, and willingness to take on risk and work.

Based on your budget

If you have very little available cash, which puts a down payment and closing costs out of reach, you might consider REITs or other real estate ETFs. If you have some savings but still fall short of investment-property amounts, consider house hacking, partnerships, or explore down payment assistance programs.

Based on your risk tolerance

Merely because you can make a substantial down payment and qualify for a loan for an investment property, doesn’t mean it’s a good fit for you. Borrowing money has inherent risks. Finding partners, REITs, or EFTs might lower or diversify your risk profile. So consider how much risk you want to take on before investing.

Based on your time commitment

Rental properties, wholesaling properties and house hacking often require a bigger time commitment than you anticipate. Other investment types, like REITs, EFTs, and becoming a partner in a real estate syndication can be much easier on your time budget.

Based on your credit and income

Unfortunately, you need to be realistic when it comes to your credit and income limitations, because any lender will be. If you’re planning to put little or no money down, and have non-stellar credit, your options may be few and far between.

Other ways to invest in real estate without owning property

If you can invest in real estate without actually owning a property, it can relieve a lot of the pressures of managing a house or building.

Real estate ETFs and mutual funds

Real estate ETFs and mutual funds allow you to participate in real estate investing by being part of a fund that invests in REITs and other real estate-related companies. You can buy shares through brokerage accounts and thereby diversify your investments and mitigate your exposure to losses, while lowering your investment costs as well. Of course, all investments come with risks, so fully research any investment you consider.

Real estate notes and debt investing

When you invest in real estate notes, or debt investing, you are buying the debt on a property rather than the property itself. In other words, you’re buying the right to receive the payments from the borrower.

While this can generate income from real estate without having to actually make a down payment on a property, it can come with risks. The borrower could default, for example, and leave you with the debt. This is why you need to assess the property’s value and the borrower’s creditworthiness.

Rental arbitrage

Rental arbitrage might sound intimidating, but it’s a simple way to make money off real estate with little to no cash down. With rental arbitrage, you lease a property and then rent it out to others for more than you are paying, usually on the short-term market.

But, of course, it’s not that simple. First, there are local and state laws to consider, which may prohibit or restrict this. Second, there could be upfront costs, such as security deposits, furnishings, advertising, vacancy costs, and more.

Fractional and digital real estate

Fractional and digital real estate platforms let you join multiple investors – sometimes hundreds or thousands – to buy shares of a property. You receive dividends and profits if and when the property generates income or profits. Sites such as Arrived and RealtyMogul make it easy to do from your living room. There are platform and other fees, liquidity restrictions, and risks, so make sure you are comfortable with the platform and the investment.

Pros and cons of investing in real estate with no money down

As with most investments, there are substantial upsides and downsides to investing in real estate. Here are some to keep in mind as you go forward.

Pros

• Lower up-front capital needs. Financing, partnerships, and pooled investments can reduce the amount of personal money you’ll need to put down.
• Myriad ways to participate. In today’s interconnected world, there have never been more ways to invest in real estate with little up-front money. You can choose active approaches, such as house hacking, or passive investments, such as REITs and real estate ETFs.
• Diversification potential. With so many options, it’s easy to diversify your real estate investments. Funds, REITs, and crowdfunding may provide exposure to multiple properties or real estate sectors.
• Opens valuable markets. With little or no money down, buying prime real estate alone becomes virtually impossible. But the varied options mentioned above open prime markets to modestly funded investors.

Cons

• Financing costs. There may still be costs despite not making a down payment. Borrowing creates interest, fees, and repayment obligations.
• Vacancy risk. Rental income can stop, expenses don’t. So if a rental unit stays vacant for a substantial amount of time, it can wipe out any gains enjoyed.
• Shared control. Partnerships, syndications, and crowdfunding mean your control is limited.
• Market volatility. REITs, real estate ETFs, and mutual funds can decline in value, just like any stock fund.
• Fees. Lenders, funds, and investment platforms often charge fees that reduce your returns.
• Repayment risk. Debt must generally be repaid even if the investment fails to perform. In other words, with a bad investment, you could be left holding an expensive bag.

Common mistakes to avoid before investing

With so many options and such valuable assets, it’s easy to make mistakes. Here are some to watch out for.

Lack of research

At first glance, a property, fund, or partnership could look promising. However, there are many factors when it comes to a profitable real estate investment. You need to understand rental demand, typical rents, vacancy rates, property taxes, local regulations, and more for individual properties. You also need to research tenants and partners.

Overestimating returns

Be careful not to base your returns on the highest rental income you believe you can charge, or short-term trends in a market. You also need to fully and objectively assess costs and surprise expenses that could crop up. Market conditions could also change – do you have a buffer for downturns?

Ignoring fees and risks

Lenders, funds, and real estate investment platforms charge fees, which cut into your profits. And no money down doesn’t necessarily mean you get out of closing costs, property taxes, insurance, repairs, and maintenance expenses. Finally, any investment, even one as “safe as houses,” comes with risk. Make sure you are comfortable with the risk level of any investment you choose.

Investing without clear goals

If your goal is to enjoy passive income, without any management or hands-on work, that demands a very different investment strategy than someone ready to devote sweat equity or management time to a project. Further, you need to decide whether your goal is steady income, appreciation, diversification, or active real estate ownership.

FAQs

Here are the answers to some common questions about investing with limited funds.

Is it possible to invest in real estate with no money?

Yes. In fact, there are more than a few ways to invest in real estate with no up-front money. From 100% financing and seller financing to partnerships, it is possible.

Is $5,000 enough to invest in real estate?

That depends on the type of real estate investment you choose. Buying a home in an upscale neighborhood may prove impossible. But rental arbitrage, partnering with another investor, or purchasing shares in a REIT might be very possible.

Can I invest $100 in real estate?

Yes, this is possible thanks to real estate investing platforms such as Arrived and RealtyMogul, which allow you to buy shares in investment properties. You can also potentially buy shares in REITs, real estate ETFs, and mutual funds.

How much money do I need to invest to make $3,000 a month?

There is no set amount you need to invest that will guarantee a $3,000-a-month return. In fact, be very wary of anyone suggesting a hard number that will guarantee you a specific amount a month in return. Make sure you understand costs, fees, and risks involved in any potential investment.

Can I buy property with no money down and bad credit?

Yes, but it likely won’t be easy. It also depends on how “bad” your credit is. If you qualify, VA and USDA loans have no-money down offerings, with flexible credit qualifications. However, there are costs to these loans, such as fees and closing costs.

What’s the easiest way to invest in real estate online?

There are many easy ways to invest in real estate online. REITs, real estate ETFs, and mutual funds are publicly traded. And online platforms such as Arrived and RealtyMogul allow you to buy shares in investment properties.

What is the biggest risk of no-money-down real estate investing?

There are many risks, but one of the significant ones is that with no money down on a home you buy, you begin with no equity. This means if the value of your home drops, you have no cushion. The principal amount you own remains the same, with interest accruing. This is what it means to be underwater on your mortgage – you now owe more than you can sell your home for.

The bottom line: Building a real estate portfolio without up-front capital

Investing in real estate does not always require high upfront costs. Like other types of investing, there is always some risk. Buying and renting an investment property has other costs and responsibilities, and you must be prepared for the potential of negative cash flow before you make money on your investment. Joint ventures and equity partnerships can give you the opportunity to pool your resources, but be sure you lay out the terms in writing before you put down any money.

To learn more about how you can get started investing in real estate, take a look at our real estate investing tips. If you’re looking to borrow against your equity to invest in real estate, get started with a cash-out refinance with Rocket Mortgage.

Any figures, interest rates, loan examples, and market data referenced in this article are hypothetical or aggregated for educational purposes only. They are not intended to reflect current pricing, available terms, or personalized loan options for any consumer. This content does not constitute an advertisement of credit terms, a solicitation or offer to extend credit, or a rate quote under federal or state lending laws. Actual mortgage rates and terms are determined by individual financial qualifications, property characteristics, market conditions, and other factors, and are subject to change without notice.RocketMortgage.com/rates, where current pricing and various loan terms are made available.

¹The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

² Home Equity Loan Product is a second standalone lien and may not be used for piggyback transactions. Valid for loan amounts between $45,000.00 and $500,000.00 (minimum loan amount for properties located in Michigan is $10,000.00). Not available on Ameriprise products. Additional restrictions, terms, and conditions apply. Must meet qualification requirements. This is not a commitment to lend.

³ Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. 

⁴ Rocket Mortgage is not acting on behalf of FHA or HUD.

This article is for informational purposes only and is not intended to provide, and should not be relied on for, medical, legal, financial, investment, or tax advice. You should consult with a qualified professional for advice specific to your situation. Consumers should independently verify that any services, products, or programs referenced meet their needs and comply with applicable requirements

Rocket Mortgage is a trademark or service mark of Rocket Mortgage LLC or its affiliates.