If you’re like most people, you may be dreaming of leaving the workforce or generating an extra stream of cash with a passive income. Even if you love your job, wouldn’t it be nice to earn an additional income with little to no effort? One of the most lucrative ways to earn a passive income is to invest in real estate. Don’t have experience or extra cash to get started? No problem. Here are a few ways to get started as a real estate investor with little experience or money.

5 Ways To Invest In Real Estate When You’re Just Starting Out

Hard Money Lenders

So you don’t have any experience and don’t have much money. Given these circumstances, it won’t be easy finding someone to lend to you. Luckily, there are “hard money lenders.” Hard money lenders lend based on collateral securing the loan and are far less concerned about credit scores and ability to repay the loan. If you can’t repay, hard money lenders take back the collateral and sell it.  They have expensive rates and fees so if you’re planning to do a flip, make sure you include those in the math. Hard money loans are perfect for real estate investments like flips because you can get them fast, have a high probability of approval and can negotiate very flexible terms.

House Hacking

House hacking is the ingenious term of renting out portions of your primary residence to help pay the cost of your mortgage or for some live completely free of cost. The basic idea is to allow other people to pay for your housing expenses. Besides generating a passive income and having others pay for your housing expenses, you gain landlord experience in a low risk environment. Many experts agree this type of strategy is the best for a beginner wanting to become an investor. You’ll learn things like tenant screening and management, rental agreements and contracts,  unanticipated housing issues, negotiating with contractors, and bookkeeping.

Partnerships

According to Brandon Turner, active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast, there is a powerful formula for no-money-down success,  that he calls “the deal triangle.” He came up with this effective formula when he first got into real estate, wanted to invest in a property and would get laughed out of the banks. On each side of the triangle is Money, Knowledge and Hustle. According to Brandon, you only need two. If you have knowledge and hustle, you’ll be able to find someone with the money or someone who has the ability obtain the money. So if you’re thinking “well I don’t have knowledge or money” than pick up a book and start reading, there are thousands out there that teach you everything you need to know about real estate investing.

Seller Financing

Seller financing is an awesome option for individuals who may have a hard time obtaining a mortgage. Rather than the traditional way of having to get a mortgage from a bank, the seller takes on the role of the lender and provides the loan. Together you set up terms and a payment schedule. A few benefits of seller financing for buyers is the typically low down payment, less closing costs and a much faster process. Seller financing works best when there is no existing mortgage on the home.

REITs

Want to get into real estate without actually having to own a property? Real estate investment trusts may be the perfect option for you. REITs are companies that own or finance income-producing real estate across a range of property sectors. They allow you to invest in real estate portfolios the same as you would in any other industry. Make money without actually having to own a property and gain exposure to the industry without ever having to be a landlord, not a bad option right?