8 ways to invest in real estate with only $20K

The one thing that nearly all successful real estate investors have in common is that they wish they had started investing in real estate sooner.

Billionaire Sam Zell says that, “All the opportunity in the world means nothing if you don’t actually pull the trigger.” 

Robert Kiyosaki, author of Rich Dad Poor Dad, believes that, “Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.”

So why don’t more people start investing in real estate sooner? 

It’s because they think they need a lot of money to invest in real estate. That may have been true generations ago when buying real estate required lots of cash. But today, that's not necessarily the truth. 

In this article, we’ll discuss eight ways you can start investing in real estate today with only $20,000 (or even less).



Benefits of investing in real estate

For just a moment, let’s set aside the mistaken belief that you need a lot of money to invest in real estate. Instead, let’s look at the benefits of investing in real estate. 

Most people put their savings in a CD or mutual fund. They believe it’s the safest thing to do and are more comfortable following the herd mentality. 

But there are five unique benefits to investing in real estate that other common investments like stocks and bonds simply don’t offer, all at the same time:

  1. Real estate appreciates over time. According to a REALTOR Magazine article from 2020, home prices have increased by nearly 49% since 2010.
  2. Income-producing rental property generates consistent income month after month from single-family rental homes and apartment buildings.
  3. Leverage (aka other people’s money) allows investors to put a little money down to maximize the amount of real estate purchased. 
  4. Depreciation is a non-cash deduction used to reduce the amount of taxable income.
  5. Tax benefits like IRS Section 1031 tax deferred exchanges and opportunity zone investing let investors delay paying capital gains tax by investing profits in more real estate.

Armed with these five key benefits, investors may be able to make money from real estate in three different ways:

  1. Increased equity created by rising property values.
  2. Consistent cash flow generated from tenants.
  3. Additional incremental income by adding value to the property.

Cash flow is one of the ways real estate investors could become wealthy. People need a place to live, and a growing number of people across the U.S. are choosing to rent where they live rather than own. 

The Roofstock Marketplace has hundreds of houses available for sale, and many with a gross yield of 11% or more. By strategically adding value to a property to increase the rent by a few extra dollars each month, savvy real estate investors may be able to boost those yields even more.



Real estate investment activities and strategies

Investing in real estate can be an active or passive activity. 

Some people enjoy being active real estate investors. They don’t mind having to fix a plumbing leak at 2 a.m, or screening dozens of tenant applications to find the ideal renter.

Managing a rental property hands-on may not be the best use of your time or money. That’s why many rental property owners are passive. They identify the best deals in various markets across the U.S., then choose to hire a local property management company to help save time and gain more peace of mind.

Three main investment strategies

Another great thing about real estate investing is that there are different ways to invest based on individual risk-reward tolerance. 

  • Core is a strategy used to buy high-quality property in ideal locations with long-term tenants.
  • Value-add is an investment strategy that investors use to create incremental revenue increases that might have a surprisingly positive effect on property value.
  • Opportunistic real estate investment strategies are used by investors who are willing to accept a higher level of risk in exchange for a potentially higher profit.



8 ways to invest in real estate with $20,000 or less

Now, let’s look at eight different ways to invest in real estate with only $20,000.

#1. Low down payment purchase

Buying a rental property with only a $20,000 down payment may sound impossible, but it can be very doable. On Roofstock there are single-family and small multifamily investment properties available that require an initial investment (i.e., down payment + closing costs + immediate repair costs) of $20,000 or less.

Financing property is also an option. You can select a lender, get preapproved online, and receive a preapproval letter to make your purchase offer stronger.

#2. Seller carryback

Owners who have a large amount of equity in a property are sometimes willing to provide seller financing by carrying back the note for a buyer. Sellers might do this because they want to avoid paying capital gains tax and aren’t interested in a 1031 exchange, so the less money they receive up front, the better.

Be sure to put everything in writing just as you would if you were buying a house with a conventional loan. Also, use an escrow company to keep track of your payments and the loan balance due to the seller.

#3. Fix-and-flip

Fixing-and-flipping might be perfect for the investor who wants to get in and out of a deal fast. The best fix-and-flip homes are the ones that already have intrinsic value (or instant equity) built-in. 

This allows you to put part of your $20,000 down and obtain a short-term, hard money loan for the rest by using the property equity as collateral. You’ll still have a little cash left over for minor repairs and updating. Fixing-and-flipping can be risky if your local real estate market slows down, you misjudge the property value, or are inexperienced with construction.

#4. Wholesale real estate

Real estate wholesalers don’t actually close on the home and don’t want to. Instead, wholesalers find an extremely motivated seller. Then they tie-up the property with a purchase contract that has a closing date of 60- or 90-days or more and a small earnest money deposit.

Once the property is off the market, the wholesaler finds an investor to assign the contract to, collects a wholesale fee, and turns a quick profit. While the wholesaler doesn’t put any money into repair work or updating, they do run the risk of not finding a buyer to assign the contract to before close of escrow. 

#5. Rent-to-own

Also called a lease-purchase agreement, a rent-to-own contract gives you the right to buy a house for a predetermined price over a specific period of time. Part of your monthly payments go toward the down payment. Your accrued equity, plus your $20,000 in cash, then let you obtain a mortgage on the property.

It’s important to have a lawyer review the rent-to-own agreement. Also, be sure that a neutral third party such as an escrow company is responsible for accepting, disbursing, and keeping track of all the payments you’ve made.

#6. Buy shares in single-family rental property

Owning shares of individual rental homes is another option. Shares can usually be bought and sold at any time and with full-service management there’s typically no need to do anything except close.

Roofstock's offering for accredited investors has a low minimum investment. Accredited investors receive their share of rental income, appreciation, and tax benefits. Owning shares of rental property is an option to diversify geographically with less capital.

#7. Real estate crowdfunding

Online crowdfunding platforms such as RealtyMogul and Fundrise pool money together from large numbers of investors. They use these “funds from the crowd” to buy Class A, investment-grade commercial real estate such as shopping centers, office buildings, and large apartment complexes. Investors receive quarterly cash flow distributions and are able to own a small piece of a large property they would likely be unable to purchase on their own.

Crowdfunding is a good way to diversify investment capital geographically and by asset class. However, investing in commercial real estate also comes with potential risks. In a recession the demand for retail and office property usually goes down significantly because consumers and businesses spend less and cut back.

#8. Real estate ETFs and REITs

Investors can also buy and sell shares of ETFs and REITs that are publicly listed on the stock exchanges. Some of the most popular ETFs (exchange traded funds) are Vanguard Real Estate ETF, Schwab U.S. REIT ETF, and iShares U.S. Real Estate ETF.

A REIT (real estate investment trust) is a company that owns or operates income-producing real estate. By law, a REIT must pay 90% of its taxable income as a dividend to shareholders. REITs are another good way to diversify an investment portfolio geographically and by specialty asset class. Some of the biggest publicly-traded REITs include Public Storage, Health Care REIT Inc., and Equity Residential. 



Investing in real estate with $20K

The goal of real estate investing is to put your money to work today so that it generates income now and creates future profit through appreciation. 

In today’s world of real estate investing you don’t need hundreds of thousands of dollars to invest. There are plenty of ways to invest in real estate with $20,000 or even less. 

Before you invest, it’s important to understand how rental property investment works. Roofstock lets real estate investors:

  • Search for property by price, down payment, cap rate, and more.
  • Analyze rental property with interactive tools to help with visualizing returns.
  • Make an offer.
  • Close on the property with the help of Roofstock’s service and transaction team.


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This article, and the Roofstock Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, legal, or real estate advice. Roofstock is not your advisor or agent. Please consult your own experts for advice in these areas. Although Roofstock provides information it believes to be accurate, Roofstock makes no representations or warranties about the accuracy or completeness of the information contained on this blog.
Jeff Rohde


Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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