How Much Money Do You Need to Start Investing in Real Estate? (2026 Guide)

The question that stops most aspiring real estate investors in their tracks is simple: "How much money do I actually need to get started?"

The answer might surprise you. While some investors start with $100,000 or more, others begin their real estate journey with as little as $10,000—or even less using creative strategies.

In this comprehensive guide, we'll break down exactly what you need financially to start investing in real estate, explore different investment strategies for various budget levels, and show you how to get started no matter where you are financially.

The Traditional Route: What Banks Require

Let's start with the conventional path—buying a rental property with a traditional mortgage.

Down Payment Requirements

For an investment property (non-owner-occupied), most lenders require:

• 20-25% down payment for conventional loans
• 15% down payment (minimum) for some [portfolio lenders](/blog/portfolio-lending-guide)
• 3.5-5% down payment for owner-occupied properties (FHA, conventional)

Example calculation for a $300,000 property:

• 20% down = $60,000
• 25% down = $75,000
• Owner-occupied 3.5% = $10,500

This down payment difference is why house hacking (living in one unit, renting others) is so powerful for beginners.

Closing Costs

Beyond your down payment, expect closing costs of 2-5% of the purchase price:

• Loan origination fees: $1,500-$3,000
• Appraisal: $500-$800
• Inspection: $400-$600
• Title insurance: $1,000-$2,500
• Attorney fees: $500-$1,500
• Prepaid property taxes and insurance: $2,000-$5,000

For a $300,000 property: Budget $6,000-$15,000 for closing costs.

Cash Reserves

Smart lenders (and smart investors) require reserves:

• 6 months of PITI (Principal, Interest, Taxes, Insurance)
• Emergency repair fund: $5,000-$10,000 minimum
• Vacancy cushion: 2-3 months of rent

Example for a $300,000 property with $1,800/month PITI:

• 6-month reserve: $10,800
• Repair fund: $7,500
• Vacancy cushion: $4,500 (2 months at $2,250/month expected rent)
• Total reserves needed: $22,800

Total Capital Needed: Traditional Investment Property

Worst-case scenario ($300,000 property, 25% down):

• Down payment: $75,000
• Closing costs: $12,000
• Reserves: $22,800
• Total: $109,800

Best-case scenario ($300,000 property, 20% down, lower closing costs):

• Down payment: $60,000
• Closing costs: $7,500
• Reserves: $20,000
• Total: $87,500

The House Hacking Advantage

House hacking dramatically reduces your capital requirements by using owner-occupied loan products:

FHA Loan Requirements

• Down payment: 3.5%
• Credit score: 580+ (580-619 requires 10% down)
• Must live there: Minimum 1 year

Example for a $400,000 duplex:

• Down payment: $14,000
• Closing costs: $10,000
• Reserves: $15,000
• Total: $39,000

Conventional Owner-Occupied

• Down payment: 3-5% for first-time buyers
• Credit score: 620+ (better rates at 740+)
• PMI required until 20% equity

Example for a $350,000 triplex:

• Down payment (5%): $17,500
• Closing costs: $9,000
• Reserves: $12,000
• Total: $38,500

Budget-Based Investment Strategies

Under $10,000: Get Creative

Options:

1. Wholesaling: Find deals, assign contracts (minimal capital)
2. Bird dogging: Get paid to find deals for other investors
3. House hacking with FHA: Save aggressively for 6-12 months
4. REITs: Start with $500-$1,000 in [real estate investment](/blog/dscr-loan-fix-and-flip) trusts
5. Partner up: Bring skills/time, partner brings capital

$10,000-$25,000: House Hacking Territory

Best strategy: Owner-occupied 2-4 unit property

Example game plan:

• $400,000 fourplex
• 3.5% FHA down: $14,000
• Closing costs: $10,000
• Minimal reserves: $8,000
• Total needed: $32,000

You live in one unit, rent out three. The rental income covers most or all of your mortgage.

$25,000-$75,000: Multiple Options

Strategy options:

1. House hack a larger property (save more reserves)
2. Buy a less expensive rental outright (20% down in lower-cost market)
3. BRRRR strategy: Buy, Rehab, Rent, Refinance, Repeat
4. Two house hacks: Start one, save again, do another in 12+ months

Example: $200,000 property in a lower-cost market

• 20% down: $40,000
• Closing costs: $6,000
• Rehab budget: $15,000
• Reserves: $10,000
• Total: $71,000

$75,000-$150,000: Serious Investor Territory

You can:

• Buy a turnkey rental property in most markets
• Purchase multiple properties in lower-cost markets
• Execute a BRRRR with significant rehab
• Buy a small multifamily (5-8 units) with commercial financing
• Invest in syndications or private deals

$150,000+: Multiple Strategies Simultaneously

Advanced options:

• Build a portfolio quickly (2-3 properties year one)
• Apartment building down payments (commercial loans)
• Fund fix-and-flips
• Become a private lender to other investors
• Syndication deals (passive investing at scale)

Hidden Costs First-Timers Miss

Don't get caught off-guard by these often-overlooked expenses:

1. Property management: 8-10% of rent if you hire out
2. Maintenance backlog: Older properties may need immediate work
3. Rental readiness: Cleaning, painting, minor repairs between tenants
4. Utilities during vacancy: Electric, water, gas while searching for tenants
5. Landscaping/snow removal: Ongoing exterior maintenance
6. HOA fees: Often $200-$500/month for condos
7. Capital expenditures: Roof, HVAC, water heater replacements
8. Property taxes increase: Post-purchase reassessment
9. Insurance increases: Initial quotes often low
10. Pest control: Quarterly or annual service contracts

Budget an extra $5,000-$10,000 beyond your calculated needs for these surprises.

How to Save Capital Faster

High-Impact Strategies

1. Reduce housing costs (24-36 months before investing):

• Move to a cheaper rental
• Get a roommate
• Move back with parents temporarily
• Save 100% of housing difference

Example: Reducing rent from $2,000 to $1,000/month = $36,000 saved in 3 years

2. Increase income aggressively:

• Side hustle targeting $500-$1,500/month
• Ask for raise/promotion
• Switch jobs for 15-30% increase
• Freelance your professional skills

3. Automate savings:

• Set up separate "real estate fund" account
• Auto-transfer every paycheck
• Deposit all windfalls (tax refunds, bonuses)
• Track progress monthly

4. Cut three major expenses:

• Car payment: Buy used, pay cash
• Eating out: Reduce by 80%
• Subscriptions: Cancel everything non-essential

Combined impact: Save an additional $800-$1,500/month = $28,800-$54,000 in 3 years

Creative Strategies to Reduce Capital Needs

Seller Financing

Convince the seller to act as the bank:

• Negotiate lower down payment (10-15%)
• Avoid closing costs associated with traditional loans
• More flexible terms

Partnerships

Structure options:

1. 50/50 equity split: Partner brings capital, you bring expertise/time
2. Preferred return: Partner gets 8-10% annually, then split profits
3. Debt partnership: Partner loans you money at fixed interest rate

Private Money Lenders

Borrow from:

• Family members (document everything formally)
• Friends with retirement accounts ([self-directed IRA](/blog/dscr-loan-self-directed-ira))
• Business associates
• Other investors looking for passive returns

Typical terms: 6-10% interest, 3-5 year balloon, sometimes equity participation

Home Equity (If You Already Own)

• HELOC: Borrow against your primary residence
• [Cash-out refinance](/blog/cash-out-refinance-guide): Get cash, invest in rental
• Risk warning: You're leveraging your home; be conservative

What If You Can't Save Enough?

Be honest with yourself. If you can't save $10,000-$40,000 for house hacking, consider:

Alternative Paths

1. Real Estate Investment Trusts (REITs):

   • Start with $100-$1,000
   • Publicly traded or private
   • Dividend income, no management

2. [Real estate crowdfunding](/blog/passive-real-estate-investing-guide):

   • Platforms: Fundrise, RealtyMogul, CrowdStreet
   • Minimum investments: $500-$10,000
   • Passive ownership

3. Learn and prepare:

   • Read 20+ books
   • Listen to podcasts daily
   • Network with local investors
   • Analyze 100+ deals
   • Build your education while saving

4. Build skills that reduce capital needs:

   • Learn property management
   • Develop rehab/construction skills
   • Study marketing for wholesaling
   • Master financial analysis

The Bottom Line: Minimum Amounts by Strategy

To summarize, here's what you actually need:

• House hacking (FHA): $15,000-$40,000
• House hacking (conventional): $20,000-$50,000
• Traditional rental (20% down): $60,000-$120,000
• BRRRR strategy: $50,000-$100,000+
• Wholesaling/bird dogging: $500-$5,000
• REITs/crowdfunding: $100-$10,000
• Private lending: $25,000-$100,000+

Frequently Asked Questions

Can I really start with $10,000?

Yes, but you'll need to house hack using an FHA loan in an affordable market. You might also need to get creative with closing costs (seller credits, lender credits) and have a small emergency fund. It's tight, but possible.

Should I wait until I have more money?

Not necessarily. If you can afford to house hack today with $15,000-$25,000, the benefits of starting now (building equity, learning, forced savings through mortgage payments) often outweigh waiting 2-3 years to save $75,000. Time in the market matters.

What if I have bad credit?

Focus on credit repair first. You need minimum 580 for FHA, 620+ for conventional. Pay down credit cards, dispute errors, wait out negative marks. Improve your score to 640+ before applying—you'll get much better rates.

Can I use my IRA or 401(k)?

Yes, with caveats:

• Traditional withdrawal: 10% penalty plus taxes if under 59.5
• First-time homebuyer exception: $10,000 penalty-free for primary residence
• Self-directed IRA: Buy real estate inside the IRA (complex rules)
• 401(k) loan: Borrow against your balance (must repay)

Generally not recommended unless it's truly a first residence (house hack).

How much should I keep in reserves after buying?

Minimum 6 months of mortgage payments plus $5,000-$10,000 for repairs. Better: 12 months of payments plus $15,000. This protects you from vacancies, major repairs, and economic downturns.

Is it better to save more or start sooner?

Balance is key. Don't start so under-capitalized that one major repair bankrupts you. But don't wait so long saving that you miss years of appreciation and equity building. Sweet spot: 6-9 months total expenses in reserves, plus all down payment and closing costs.

What markets can I invest in with less money?

Look for markets with median prices under $250,000:

• Midwest: Indianapolis, Cleveland, Kansas City, St. Louis
• South: Memphis, Birmingham, Little Rock, Jackson
• Other: Rust Belt cities, smaller college towns

Do your research—some cheap markets have population decline and weak rental demand.

Can I get the seller to pay closing costs?

Yes! Negotiate seller concessions of 3-6% to cover closing costs. More common in buyer's markets. Reduces your cash needed significantly, though you pay slightly more in purchase price usually.

Ready to Start Your Real Estate Journey?

Now you know exactly how much money you need—and how to get creative if you don't have it yet. The key is to start planning, saving, and educating yourself today.

Remember: every successful real estate investor started with their first property. Many started with less capital than you might think. What separates those who build wealth through real estate from those who don't isn't usually the money—it's the decision to start.

Get started with your personalized investment plan today →

Our team will help you analyze your finances, explore your options, and create a realistic path to your first investment property—whether you have $10,000 or $100,000 to invest.

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• [Using a HELOC for an [Investment Property Down Payment](/blog/investment-property-down-payment): Smart Strategy or Risky Move?](/blog/heloc-for-investment-property-down-payment)
• Using a HELOC as a Down Payment for Rental Property