It’s possible to get into real estate with little-to-no savings.
Investors who started with very little share the strategies they used to get their first properties.
Some raised capital and took advantage of seller financing. Others bought with partners and split upfront costs.
One of the biggest barriers to entry when it comes to buying real estate is capital. Between the down payment and closing costs, purchasing a home can require a lot of upfront cash.
It’s possible, however, to get your foot in the door with little-to-no savings.
Insider has spoken to a handful of successful investors who have done so. Here are the creative financing strategies they used.
When Caleb Hommel and Chuck Sotelo were looking for their first property to invest in, they had three stipulations: they wanted a multi-family property, they wanted to inherit tenants, and the seller had to be open to seller financing.
The third requirement was the most important, since they wouldn’t be able to buy a property without it.
Hommel and Sotelo, who met on the first day of high school, were teenagers when they decided they wanted to invest in real estate. They didn’t have any savings — except a couple hundred dollars each — nor did they even know what their credit scores were. They were still in junior college at the time and delivering food to pay for an online real estate mentorship program.
Seller financing was necessary considering their age and financial standing, Sotelo told Insider: “We worked for DoorDash and made like 400 bucks a month. Nobody’s going to give us a bank loan.”
For their first property, a $900,000, 10-unit building in south Texas, they found three investors who each put in $30,000.
“Raising the money wasn’t as hard as I expected it to be,” said Hommel. “It was just reaching out to anybody and everybody, presenting our deal, and seeing if they’d be interested.” It helped that they’d put so much work into finding an excellent deal, he added: “Once we realized that all we needed was the deal to be good enough, the process became a whole lot easier.”