How to Invest in Real Estate on Lower Income ($50,000 or Less)

0:00Do you think you can't invest in real estate because you have a lower income? Wrong. It is not only possible to invest in real estate, but I think it's the best way to improve your financial situation if you're at the lower end of the income ladder. Even if you only make$50 ,000 per year, as an example, there are financing options, government programs, and investing strategies specifically designed to help you get into your first real estate deal and progress towards financial freedom from there. Today, I'll break down why investing in real estate makes sense, even if it seems unachievable at first glance.

0:36I'll share which strategies to focus on if income is your main barrier to entry, and I'll share a few programs to check out that could be a total game changer.

0:51What's up, BiggerPockets community? I'm Dave Meyer, and welcome back to the BiggerPockets Real Estate Podcast. Today, we are tackling one of the most common questions I hear from our community. Basically, I want to start investing in real estate, but I'm only making$50 ,000 or less per year. Is it even possible? And let me just tell you right off the bat, the answer is absolutely yes. In fact, some of the most successful investors I know started with modest incomes and limited capital. And today we're going to break down exactly how you can get started even on a tight budget. First, I'm going to share seven different funding options to consider if you have a low income.

1:34Then I'll talk about my favorite investing strategies for people who are capital constrained. And I'll finish up the episode by going sort of step by step through how to take action on your first investment. So if you're making$50 ,000 or even a little more than that, this episode is designed specifically for you. Let's dive in. We're going to start with talking through different funding options because we need to get this big question out of the way, right? I'm sure there are a lot of folks who are on the lower end of the income spectrum thinking that they want to get into real estate investing, but just don't know how to get the capital and how to finance these deals because real estate is amazing, but it is a very capital intensive business.

2:20You do need money to get into this business. But the good thing is that real estate investing is not necessarily like buying a traditional home. You don't actually have to put down 20 % of the full purchase price to acquire the asset. And there are actually seven different options to consider if you want to invest with a lower income. And not everyone is going to work for every investor. That's why I'm giving you a couple of different options here. I'm not going to go super into depth into each of them. I just want to show you that there are possibilities out there if you're willing to search and figure out which one of these actually works for you.

2:58Option number one is an absolute classic. It is an FHA loan. And this is absolutely perfect for folks on the lower end of the income spectrum because they were designed specifically for low income Americans to get them into the housing market. So if you are doing a house hack or potentially even a live and flip, I'll explain that in a minute. This is a really powerful strategy. Now, it is important to know that FHA loans are only available for people who are owner occupied. You have to live in the property that you buy with an FHA loan. So house hacking or live in flips really are the only options here.

3:40You can't just like go out and buy a duplex, rent it out to two people and use an FHA loan. But for people who are just getting into the game and have a lower income, owner occupied strategies like house hacking and live in flips are two of, if not the two absolute best strategies to get started. So these sort of work really well together. The reason FHA loans are so great for people who are getting started with a lower income is that you can actually put as little as 3.5 % down on a property. So I know the traditional amount that most people hear is putting 20 % down, but this is a government-sponsored program where you can put as little as 3.5 % down.

4:20So if you're talking about buying a$300 ,000 property, for example, your down payment will be close to$10 ,000, which is a lot easier to stomach and get together, then$60 ,000 like you would be putting down if you put 20 % down. Or as a real estate investor, often you put 25 % down. And then that case, you'll need$75 ,000 to put down. So it's a lot better. The other really incredible thing about this is when you put 3.5 % down, you don't have to just buy a single family home. You can actually buy a two, a three, or up to a four unit property. And that's sort of why it works so well for house hacking, because you can live in one of those units and rent out the other one, two or three units that you get.

5:08It's also great for people who have relatively lower credit scores because credit scores for an FHA loan can be as low as 580. You definitely still want a higher credit score because the higher you go in your credit score, the better rate you're going to get. But if you have low credit, these options are still available. The debt to income requirements can be up to 57%, which is much more lenient than a conventional loan. You're allowed to get gifts for a down payment if that's something available to you. And you can actually count some of your expected income, up to 75 % of it, towards your qualifying income.

5:45So all of these things together make it an incredibly powerful way for lower income folks to get into the real estate investing game because it addresses head on the hardest part of getting in the game, which is figuring out that money for your down payment instead of putting 20 or 25 % down, put as little as 3.5 % down with an FHA loan. So that was option number one. Option two is a different but somewhat similar approach to getting into the game. This is using a conventional loan with low down payment options. There are some more traditional banks now that allow you to put 3 or 5 or 10 % down, specifically, usually for first time homebuyers.

6:31So again, this is going to work for people who are going to embrace the many, many benefits of owner occupied strategies like house hacking or the live in flip. With a lot of these options, you don't necessarily have PMI, private mortgage insurance, FHA loans. One of the downsides I should mention of that is, yeah, you can get in with a lower down payment, but there are some additional fees. It's called PMI on top of your normal principal and interest payments that make your monthly mortgage payments a bit higher. Obviously, that's an ideal. It can hurt your cash flow or how much money you're saving.

7:04And so with these conventional loans with low down payment options, you can potentially avoid them. Now, there are tradeoffs because they probably have higher interest rates. The underwriting might be a little bit more strict than some of the things I mentioned in the FHA loan. But don't overlook these because more and more lenders are offering these kinds of financing, and it can be a really good way for low-income folks to get in the housing market. Our third approach for low-income people to get into the real estate game is a little bit different tactic, which is partnership strategies. If you can't get together enough capital to put a down payment on your property, either they're putting 20 % or 25 % down, or for some folks, it's not going to even be possible for three or 5 % down.

7:50And that's totally okay. This is a similar situation for how I got started. I really had no capital to put into my first deal. And so I used a partnership strategy. And this is a very, very common way for real estate investors to get into the game. I know a lot of people put on social media that they're buying all these properties. A lot of those people are using partnerships. This is very common. Not many people have all of this money that they can invest into real estate right away. So they go out and find someone to partner with. Now, there's tons of different formats for partnerships, but I'd say there's basically two different approaches that you can consider to get off the bat.

8:31One is a down payment partner or partners. If you don't have the capital to go out and make this down payment, see if you can find someone in your network who does have an interest in real estate investing, who wants to partner and support you and can contribute some or all of that down payment. Now, you should mention it doesn't just need to be down payment. You're also going to need closing costs. You should also have cash reserves in there. But basically find someone who can bring the capital that you need. And then your job in that deal is to go find a deal, operate that deal successfully and create a successful partnership.

9:09Another way to do it is maybe you don't have great credit or you don't work a W-2 job. So you can actually go find a partner who maybe does have a credit and who can qualify for finance or has a higher debt to income ratio. That's another form of partnership that you can go out and seek. So whether you want to call this private money or partnering, whatever it is, the idea here is go out into your network. And to be honest, if you're first getting started, it's probably going to be friends and family. Go see if you can raise some money from friends and family to get into your first deal. Now, if you don't have friends or family that can provide that capital, totally understand a lot of people are in that situation.

9:52You can go and look for partnerships or money outside of that circle. But I just want to be realistic that that is a challenge. If you're going to partner, looking first to friends and family is going to be the easiest way to do that. If you need to get pulled together two, three, four different partners to get that first deal, that's okay. For me, I think the most important thing is to get into that first game. I had three partners on my first deal. And again, this is a very normal way to get into real estate investing. Number four are creative and seller financing. When you don't have enough capital to put down to buy a property, you can look into things like seller financing.

10:36If you haven't heard of this before, basically, when the owner of a property doesn't have a mortgage on their property, and that's actually about 40 % of people right now, you can go to these people and see if they would be willing essentially to be the bank for you. So instead of buying your property with a mortgage and making mortgage payments every month to Chase or Wells Fargo or whatever, you actually just pay those monthly payments to the seller. And although you're still going to have to pay something every month, the terms of that loan are very flexible. Basically, whatever you can agree to with the seller is possible.

11:15The interest rate is entirely negotiable. The down payment is entirely negotiable. The amount you pay for the property is entirely negotiable. So if you're one of these people who doesn't have capital, you don't want to do a partnership, looking for seller financing, can be a great option. Now it's worth mentioning, not every seller wants to do this and you do need to make it worth the while for the seller. Like I had someone approach me about seller financing a deal I own outright right now, and they wanted to put 10 % down. They wanted to pay market rate and they wanted a 5 % interest rate. I said, why would I do that?

11:52Like, I'm just going to make the same amount of money and basically lend you money at a lower interest rate than I can make elsewhere. So you have to remember that the seller is not going to be doing this out of the kindness of their heart. And so sometimes you need to pay a little bit higher of an interest rate. Sometimes you might need to pay a little bit over market comps for that property in order for the seller to agree to something like this. So don't expect the world on these kinds of deals. You have to find a mutually beneficial structure so that you and the seller both benefit from this kind of deal.

12:26Financing option number five, don't overlook these. down payment assistance programs. There are so many different state and local municipalities that offer down payment assistance programs specifically to help low to moderate income buyers get into the housing market. Oftentimes, these are grants that don't need to be repaid. They're just money that you essentially get for free. Sometimes they're structured in the form of zero interest loans for down payments and closing costs. Sometimes you get a credit at closing and you don't have to come out of pocket for any of these things. There is a huge variance in what is offered, but absolutely look into what is available to you.

13:10If you live in a city, Google the name of that city and down payment assistance programs or first time home buyer assistance programs and see what they have. Do that for your state as well. Also ask your lender and ask your agent about them because they absolutely should be familiar with what programs are available in your area and help you figure out how to navigate those things. Option number six is only available to certain segments of the population, but it is an amazing tool for anyone who has served in the military. There is something known as a VA loan. This is for military veterans or active military, and it offers zero down payment options.

13:52That's right. You can put$0 down if you're active military or a veteran. There is no PMI like there is with an FHA loan. That saves you hundreds of dollars per month. You still get competitive interest rates. They're often better than FHA loans. And just like an FHA loan, you can buy up to a four-unit property as long as you're going to do the owner-occupied thing. So this is an awesome option for anyone who qualifies for it. And similarly, our seventh and last financing option is USDA loans for rural investment properties. This is another government program that allows you to put, you know, sometimes zero down.

14:34You get below market interest rates. These properties do need to be in rural areas. They need to be designated by the USDA to be in certain areas. But if you're looking to buy a property in those areas and you meet the other qualifications, USDA loans can offer you a 0 % down way to buy your first property. So those are our seven options for low-income folks to look for if they're trying to get their first real estate investment. And like I said, not everything is going to work for everyone. But the key takeaway here is that there are multiple different financing paths available to you that, honestly, higher-income investors can't even access.

15:16So your job is to look at the seven different options that I just outlined here and figure out which of these works for you. You got to do more research. We have tons of resources on BiggerPockets. You can go learn more about each of these in more detail, but figure out which one is going to work for you because it's not going to work for every single person. But I bet for 80, 90 % of people listening to this podcast, one of these options could actually work for you. So go check these out. Now we need to turn our attention to which strategies, which types of deals work for lower income investors.

15:52We're going to get to that right after this quick break. Stay with us. Most banks will give you a line on your primary residence and stop there. AVEN looks to underwrite the equity in your investment property, the second home you have, the property you hold in your own name, and put a line of credit against it on a Visa card. Same asset, same logic. Think about what this unlocks. Earnest money the day a deal hits the MLS. A contractor paid on Friday instead of next month. High rate balances you are already carrying refinanced onto a line secured by equity you own. All at a fraction of the cost.

16:30With AVEN, you can check your offer at no cost with no impact to your credit score. There are no hidden fees and because you own a home, you qualify for a rate that credit cards simply cannot offer. Avon has a 4.9-star Trust Pilot rating from over 8 ,000 verified customers. If you own property and you're financing your next move on an unsecured card or expensive short-term debt, you are overpaying for capital. Avon fixes that. Go to avon.com to discover your offer. Stop overpaying for capital. Avon accounts are arranged by Avon Financial, Inc., NMLS number 2042345. AVEN accounts are issued and held by Coastal Community Bank, member FDIC, equal housing lender, and MLS number 462289.

17:16AVEN cards are issued pursuant to a license from Visa USA, Inc. Terms and conditions apply, subject to credit and property approval. Eligibility and availability vary by state and property type. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most.

17:53Learn more at Accenture.com slash Spotify. At The Home Depot, get up to 15 % off all installed carpet projects for a limited time. featuring brands like LifeProof, LifeProof with PetProof Technology, Home Decorators Collection, and Traffic Master. Take your pick of carpet built for real life and designed for real comfort. Plus, with installations starting as low as 49 cents per square foot and a free measure to get you started, we'll handle the hard parts for you. Offer valid July 16, 2026 through August 2, 2026. Exclusion Supply. For licenses, see homedepot.com slash license numbers. When you need to build up your team to handle the growing chaos at work, Use Indeed Sponsored Jobs.

18:33It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

19:01Welcome back to the BiggerPockets podcast. I'm Dave Meyer, sharing strategies and tactics that lower income investors can use to get into the real estate investing game. We talked about seven different financing strategies before the break. And next, I wanna touch on two investing strategies that can be really effective even if you're only making$50 ,000, give or take. And again, we have tons of episodes, resources on BiggerPockets that you can use to go dig into these in more detail because I'm just going to provide an overview so that you can select which ones you want to do more research on.

19:36The biggest bucket of strategies that work for low-income investors are the ones that I mentioned before the break, which are owner-occupied strategies. These give you access to the best financing options like FHA loans, like VA loans, low down payment conventional mortgage. These are all available if you are willing to do the owner-occupied strategy. Now, there are two different ways that you can use owner-occupied. And we often talk about one of them. But the second one, I think, is one of the least appreciated overlooked strategies in real estate investing. The first one, though, is house hacking.

20:14You've probably heard of this, but basically it's where you buy a two to four unit property using an FHA loan. You can use a conventional mortgage, but for purposes here, it's about using a low down payment loan, live in one unit and rent out the others. And the rental income from your tenants should cover at least some of your mortgage payments so that you're saving money every single month. You don't need to be cashflow positive in these situations. The goal of a house hack is actually to reduce your living expenses as much as possible so you can save up as much money as you can to go out and buy your next deal.

20:51And this is just an absolutely proven no-brainer model. I've seen people effectively live for free while building equity and learning the landlord business. It's awesome. And again, the beauty is that you're using owner-occupied financing. If you're lower income, you can put as low as 3.5 % down. You're getting great rates. You're getting more lenient qualification requirements than a normal investor loan. And plus, you get to learn property management, sort of the training wheels for being a landlord while you're doing all of this. But that is not the only owner-occupied strategy that you should consider.

21:26There is also the live-in flip strategy. Live-in flip is basically when you flip a house, but it's the house that you are actually living in. And there's a really key difference here because when you go out and flip a home in a traditional way, you are using hard money most of the time, which is super high interest rate debt. Usually it's 10, 12, up to 15%. Sometimes you can put 10 or 20 % down, but you're still making a large down payment. You have to pay for materials somehow to actually go and flip a house, whether you're taking out a loan or paying for that out of pocket. And the whole game of doing a flip is doing it quickly to reduce all of your holding costs, like your loan payments and your taxes and your insurance payments.

22:15So you want to do it quickly. The live-in flip, though, takes a lot of that pressure off because if you buy correctly, you can use one of these owner-occupied types of loans, maybe a VA loan or a low down payment conventional mortgage option. And you can take as long as you really want to do the flip. But basically, you should give yourself about two years because there's this really awesome part about the live in flip, which is that if you live in that property for two years or more, you have to basically live in it for two out of the last five years, that all of the money that you make on that live in flip, all the profit is actually exempt from taxes.

22:55You do not pay capital gains tax on that. And that is incredibly powerful. So basically you could do the live in flip and then hopefully generate enough equity, go and sell it. And then when you do that, You can either go buy a house hack or you can buy a rental property or you could just go and do another live in flip. And I love this option again because it has a lower down payment option for lower income investors. Now, the types of properties that you're going to need to do this for will change because for an FHA loan, there are specific requirements for the house that you need to hit. And oftentimes it can't be in really bad shape to get an FHA loan.

23:38But on the flip side, there are other government programs that allow you to borrow the money that you need to renovate a home like a 203k loan. Awesome option for people here to consider if they want to do a live in flip strategy, or you could just go out and look for a conventional mortgage with a low down payment option. Use that to purchase the house and then either come out of pocket to buy the flip or potentially partner with someone to buy the materials and pay for the labor that you need to do a flip. But I would highly recommend considering this if you're handy, if you're willing to get your hands dirty a little bit.

24:13This could be an incredible wealth building strategy, especially early in your investing career when you need to build up equity that you can use to go out and buy subsequent investments. This is a really good way to supercharge your equity growth early in your career. So those are two great strategies for low-income investors to get started. The third is the BRRRR strategy. If you haven't heard of BRRRR, it stands for buy, rehab, rent, refinance, and repeat. And it is basically a strategy that allows you to recycle at least some of your capital into multiple deals. The idea is you go out and buy a property.

24:51You have to put some money into that deal. As a down payment, you need to put some money into that deal to renovate the property. But once you've built up equity and improved the value of your property, you can refinance it, take some money out of the deal and use it for your next property. This is why BRRRR is so popular, especially for people who have limited capital, but it's honestly just popular for everyone because it allows you to be very efficient with the capital you want. And that's valuable to everyone, whether you're a low-income investor or a super successful investor. Now you can sort of do a BRRRR with an owner-occupied hybrid, but if you were going to do a BRRRR without owner-occupied, you are gonna need some capital.

25:37So like this isn't a no money down strategy. You still need to find money somewhere to go purchase this property and pay for the renovation. You can do that through some of the financing options I mentioned above. A common way to do this would be through partnerships, but you are gonna need some capital. But the reason I like this is because BRRRR, if you can get that first injection of capital, you might not just be able to buy your first property. That might help you get your first and second property or your first, second, and third property because it's a very efficient use of the capital you have.