How to Invest in Real Estate Without Taking Out a Large Mortgage

Real estate investing has a lot of appeal, from building a property empire to

generating rental income. However, it’s a major commitment and requires

significant out-of-pocket costs. How can you get started in real estate without taking

out a large mortgage or spending your life savings?


First, consider your goals. How hands-on do you want to be with your investments?

Owning rental properties, for example, involves significant expenses, including

paying property taxes and routine maintenance. It also generates rental income only

when you have tenants, and you’ll likely need to add a cushion for vacancy costs.

For investors who prefer a more hands-off approach, consider renting out spaces like

storage unit complexes or industrial space. You can even invest in commercial real

estate through a REIT, which is an exchange-traded fund that tracks the

performance of various property types.


Another factor to consider is your budget. Unlike stocks and bonds, which can be

purchased with relatively little capital, real estate requires substantial upfront funds.

To reduce the required investment, look for a strategy that can allow you to

purchase properties at a discount. Wholesaling, for example, is a popular real estate

investment strategy that allows you to buy properties at below-market prices. Then

you turn around and sell them for a profit. This is a good option for investors who

want to buy and hold properties, but who may not have the money or time to

become landlords. For more


You can also choose to invest in real estate without owning physical properties, such

as through REITs and online real estate platforms that connect investors with real

estate projects. This can be less expensive and less time-consuming than owning

rental properties, but it won’t provide the potential for long-term appreciation and

rental income that comes with direct ownership.


It’s important to remember that real estate investing can be a great way to diversify

your portfolio. As a non-correlated asset, it can help mitigate risks that may come

with more traditional stocks and bonds. Graham notes that a well-diversified

investment portfolio should contain assets with a range of risk and return levels,

from low-risk investments to high-risk ones.


Finally, don’t rush in. Before you start buying and selling properties, build a strong

financial foundation by paying off your own home mortgage, contributing to

retirement accounts, and saving, save, save to ensure you have the money to pay in

full for an investment property. This will help you avoid costly mistakes and reduce

your risk.

Whether you’re looking to get started in real estate investing or to diversify your

existing investment portfolio, there are plenty of options out there for every budget.

Just be sure to do your research and understand the pros and cons of each strategy

before making any major decisions. You should also have a go-to list of trusted

resources for property managers, CPAs, lenders, real estate agents, and other key

players to ensure you’re set up for success. And remember, don’t be afraid to ask for