How Much Money You Need to Start in Real Estate

The short answer: if you’re willing to live in the property, you can start investing in real estate with about 3.5 percent down using an FHA loan — roughly $10,500 on a $300,000 duplex, around $24,500 all-in with closing costs — not the 20 to 25 percent investors pay.

The number in most people’s heads is the investor number: 20 to 25 percent down, plus reserves, plus a cushion. There’s a much cheaper door in, and it’s the one I actually used.

“How much money do I need to start investing in real estate” almost always gets answered with the investor number, because most real estate content is written for investors buying pure rentals. That number is real (20 to 25 percent down, plus closing costs, plus reserves, easily $60,000–$100,000+ on a modest property). If that’s the only door you know about, it’s reasonable to conclude real estate investing is for people who already have money. It isn’t the only door.

The investor door vs. the owner-occupant door

Lenders treat these as two completely different transactions. An investor buying a property they won’t live in is a bigger risk to the lender, so they require more skin in the game: typically 20–25% down on a rental. Someone buying a property they’ll live in (even if part of it gets rented out, like a duplex where you occupy one unit) qualifies for owner-occupied financing instead. An FHA loan gets you into a one-to-four-unit property with as little as 3.5% down, as long as you live in one of the units. Conventional owner-occupied loans can go as low as 3–5% for many buyers, and VA loans can reach zero down for eligible veterans.

That difference isn’t marginal. On a $300,000 property, 25% down is $75,000. 3.5% down is $10,500. Same asset, radically different amount of cash required, and the only thing that changed is whether you live there.

A real range, not a guess

Total “cash to close” on an owner-occupied purchase runs in roughly four buckets: the down payment (3–5% typically), closing costs (roughly 2–5% of the purchase price), a reserve requirement if your lender has one, and a buffer for early repairs you shouldn’t skip even though no lender requires it. For a two-unit property specifically, I broke the exact math down, dollar by dollar, in How Much Money Do You Need to Buy a Duplex?: on a $300,000 duplex it lands around $24,500 all-in, before any down-payment assistance. A single-family home you don’t rent any part of follows the same low-down-payment math but without the rental income offsetting your payment afterward, which is the whole case for going the duplex route if a multi-unit property is available to you.

Where I actually started

I didn’t start with $24,500 or anything close to it. I started in a van, then worked up to an $185,000 starter home through a county first-time-buyer assistance program — not a large sum, a public program built for people without much saved. That home was the step that got me to the duplex years later. Down-payment assistance programs specifically for two-to-four-unit properties exist too, and they’re worth searching for by name in your state and county before assuming you have to save the whole number alone.

What this doesn’t include

None of the above assumes you have great credit already, a done-for-you deal in hand, or a lender lined up. Those take time to build if you don’t have them yet, and that time is worth spending — on credit, on savings, on learning what a real listing’s numbers actually look like — before you’re under contract, not during.

Find your actual number

The generic ranges above are a starting point, not your number. The free readiness roadmap takes your real income, savings, and credit and gives you a phased plan toward your first deal instead of a one-size-fits-all figure. If a two-to-four-unit property is realistic where you’re looking, start with What Is House Hacking? to see whether the owner-occupant path makes sense for you.

If the plan is to buy under market, renovate, and refinance your cash back out, run the numbers through the free BRRRR calculator before you commit a dollar.