Real estate has long stood as one of the most proven paths to building long-term wealth. The idea of earning passive income, watching property values rise over time, and having a tangible asset to your name is highly appealing. But one of the most common questions for beginners is simple and practical: how much money do you actually need to start investing in real estate?
The answer varies depending on the type of investment you’re interested in, your strategy, and your location. Real estate investing is not one-size-fits-all, and there are more options than most people realize, some of which require significantly less capital than you’d expect.
Traditional Rental Properties
The most common form of real estate investment is buying and holding a rental property. This involves purchasing a home or apartment unit and renting it out for monthly income, ideally while the property appreciates in value over time.
To invest in a typical rental property, you generally need a down payment of at least 15% to 25% of the property’s purchase price. This is because investment properties don’t qualify for the low-down-payment programs that owner-occupied homes do. For example, if you’re eyeing a $200,000 home, a 20% down payment would be $40,000.
In addition to the down payment, you’ll need to budget for closing costs, which can range from 2% to 5% of the home’s price. Add in potential repairs and renovations, which vary depending on the property’s condition, and you’re likely looking at a starting point of $50,000–$75,000 in upfront capital. Some investors also set aside emergency funds to cover several months of mortgage payments in case the unit goes vacant.
“Most new investors underestimate the costs of getting started—not just the purchase, but the rehab, reserves, and learning curve,” says Erik Wright, Founder & CEO of New Horizon Home Buyers. “Having at least six months of emergency reserves is just as important as your down payment.”
House Flipping
House flipping is another popular real estate strategy, where you purchase undervalued or distressed properties, renovate them, and sell them at a profit. This approach can offer faster returns than rental income, but it’s riskier and more capital-intensive up front.
Beyond the purchase price, you’ll need to budget for renovations—everything from cosmetic fixes to structural upgrades. A moderate renovation can easily cost $25,000 to $50,000, and high-end flips may go much higher. You’ll also need to cover the holding costs while the property is being renovated and waiting to sell. These include mortgage payments, property taxes, insurance, and utilities.
“Flipping can be profitable, but beginners often make the mistake of underestimating timelines and overestimating returns,” warns Ryan Whitcher, founder and CEO of Harmony Home Buyers. “You need a detailed rehab plan, a buffer for unexpected issues, and access to funding—even private or hard money loans—to manage cash flow.”
Realistically, to get started with a single flip, you may need anywhere from $60,000 to $150,000, depending on the market and scope of the project. Hard money loans and investor partnerships can help reduce the personal capital required, but flipping still demands significant financial and time commitments.
Real Estate Investment Trusts (REITs)
Not all real estate investing requires buying property. Real Estate Investment Trusts, or REITs, allow you to invest in portfolios of real estate assets—such as apartment buildings, shopping centers, and office spaces—without the hassle of managing them.
REITs trade like stocks and can be bought through brokerage accounts with as little as $10 or $100. This makes them one of the most accessible ways to get into real estate investing. REITs often pay dividends, offering passive income along with potential for capital appreciation.
While you won’t get the tax benefits or leverage of direct ownership, REITs are a great entry point for those who want exposure to real estate without needing tens of thousands of dollars.
Airbnb and Short-Term Rentals
Short-term rentals, like those listed on Airbnb or Vrbo, have exploded in popularity. Investors love them for their ability to generate higher returns than traditional long-term rentals, especially in tourist-heavy or high-demand areas.
However, the startup costs can be steep. In addition to a down payment and closing costs, you’ll need to furnish the property attractively, obtain proper licenses, and potentially cover cleaning services and property management. A one-bedroom unit might need $5,000 to $10,000 for furnishings alone.
Depending on the location and size of the home, you might need anywhere from $25,000 to $100,000 in total to get started with a short-term rental. However, creative strategies like subleasing with landlord permission or “Airbnb arbitrage” can help you enter this space with less capital—though they come with legal and logistical complications.
Real Estate Crowdfunding
Another modern and more affordable method is crowdfunding. Platforms like Fundrise, RealtyMogul, and CrowdStreet allow you to invest small amounts—sometimes as little as $500—into large-scale real estate projects.
You essentially pool your money with other investors to buy into commercial or residential developments. In return, you may receive quarterly payouts and share in the appreciation of the underlying asset.
This is a lower-barrier way to get involved in real estate without owning or managing property directly. However, investments are typically illiquid, meaning you won’t be able to cash out easily, and returns can vary.
House Hacking
One increasingly popular strategy, especially among younger investors, is house hacking. This involves buying a multi-family property—like a duplex or triplex—and living in one unit while renting out the others. Because the property is owner-occupied, you can qualify for low-down-payment loans such as FHA loans, which may require as little as 3.5% down.
“House hacking is hands down the smartest way to start in real estate if you’re just getting going,” says Brandon Hardiman, owner of Yellowhammer Home Buyers. “You get landlord experience, live affordably, and build equity—all at once.”
For example, purchasing a $300,000 duplex could only require a down payment of $10,500. With rental income from the other unit(s), your mortgage may be partially or fully covered, making it an excellent wealth-building strategy for beginners with limited funds.
So, What’s the Minimum You Really Need?
If you’re aiming to own physical property, the starting range is typically between $20,000 to $75,000 depending on location, financing, and renovation needs. But if you’re open to alternative strategies, you can begin with much less.
Someone with just $500 can start through crowdfunding. A few hundred dollars can get you exposure through REITs. And a young investor with a steady income and decent credit can start house hacking with as little as a few thousand dollars saved for a down payment.
Final Thoughts
There’s a common myth that real estate is only for the wealthy. While large capital certainly opens more doors, there are many ways to get started on a modest budget. Whether you’re saving for your first rental property or investing passively through REITs or crowdfunding, the most important step is to start learning and taking action.
Real estate rewards patience, research, and strategic thinking. Instead of focusing on how much you don’t have, focus on the approach that fits your current financial position. With the right mindset and knowledge, your first investment can be the beginning of a much larger journey.