How to Invest in Real Estate with No Money and Bad Credit

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Written By Justin McGill

DealBloom aims to share the latest tips and strategies to help realtors, brokers, loan officers, and investors navigate the world of real estate.

If you’re like most people, the thought of how to invest in real estate with no money and bad credit probably seems like a pipe dream. But it doesn’t have to be! With a little creativity and perseverance, you can do it successfully. Here are some tips on how to invest in real estate with no money and bad credit.

First, look for properties that need minor repairs or cosmetic updates. These types of properties are often more affordable than those that are in perfect condition, but they can still offer good returns once they’ve been fixed up. You may be able to finance the purchase and renovation costs through a traditional mortgage or by working with private lenders.

Second, consider partnering with another investor who has more capital available. This can help offset your lack of funds and give you access to deals that would otherwise be out of reach. Be sure to carefully vet any potential partners before entering into any agreements though, as not all partnerships work out well in the end!

Read more to learn how to invest in real estate with no money and bad credit and be on your way to building a successful portfolio.

How to Invest in Real Estate with No Money and Bad Credit

No cash? No problem.

For beginners seeking to invest in real estate, the first step is understanding your credit score.

This number, which is a statistical method for lenders to determine the probability of you paying back the money borrowed, is critical when acquiring financing for real estate.

A higher credit score equals lower interest rates, which saves you money in the long run.

A person’s creditworthiness is determined by their credit score. The most popular model for scoring is the FICO model, which ranges from 300 to 850. A person with a score of 850 is considered to be very creditworthy, while a person with a score of 300 is considered to be not very creditworthy.

It looks something like this:

  • Bad Credit: 300 – 600
  • Poor Credit: 600 – 649
  • Fair Credit: 650 – 699
  • Good Credit: 700 – 749
  • Excellent Credit: 750 – 850

Although each credit agency has its own evaluation system based on different factors, a common credit score calculation is based on five major factors.

  1. Payment History = 35%
  2. Outstanding Balances = 30%
  3. Length of Credit History = 15%
  4. Types of Accounts = 10%
  5. Credit Inquiries = 10%

The first step to buying a home is understanding your credit and how it affects your investment opportunities. Your credit score will determine what type of loans you qualify for, and whether or not you are eligible for any down-payment assistance programs.

Understanding your credit standing will only improve your real estate financing and investment strategies.

Investing in property with no down payment is incredibly important, but it’s certainly not your only choice.

Real Estate Wholesaling

One of the best ways to invest in real estate with no money is wholesaling.

With no money or bad credit, working with a wholesale company is the only way to go. So let me explain how the system actually works.

The main focus is to find houses that are in poor condition. These could be just walking around neighborhoods and knocking on doors or driving around looking for houses that look run down.

There are many different ways to find a property that is in need of work and then negotiate with the current owner to see if they are willing to sell it for cash. After the negotiation, the wholesaler will get the property under contract.

The wholesaler doesn’t buy or own the house.

The wholesaler has a contract with the owner that stipulates that either the wholesaler or a buyer will purchase the property for cash at a set price. The wholesaler then takes this information and sends it out to their list of buyers, which consists of other investors.

After repair value (ARV) is one of the most important things to understand when looking at properties that may need some work. By making simple improvements, such as painting or adding new flooring, you can increase the property value quite significantly. This forced appreciation can be a great opportunity for growth.

Wholesalers are taking advantage of people’s need for money, perhaps they had recently gone through a divorce, or maybe they were short on cash. Therefore, you often get a really steep discount on the asking price of the home.

This just opens up a huge opportunity for you, the savvy investor.

If you’re interested in a property, go take a look at it! If you like what you see, then you can start working on making an offer.

At this point, you can bid for the property in cash.

Whoever bids the highest amount, then, will win the listing. They’ll have to pay a minimum fee, but anything above that is up for grabs.

ARV is important because it sets the maximum amount you can bid on a property. If you’re looking to get started in real estate investing with no money, one option is to find properties that are being auctioned off.

Rent to Own Lease

A rental-to-own agreement can be a great option for those trying to invest with no money or for those who are considering listing their property but aren’t in a hurry to do so.

In this strategy, the landlord is interested in selling, but not at the moment. The tenant pays their monthly rent and an additional sum which is set aside each month for an eventual downpayment.

At the end of the lease, the landlord is guaranteed a sale.

A lease option is a way for tenants to get into a property without having to pay the full asking price.

House Hacking

Another way to invest in a property with no money and no credit is house hacking.

This term refers to renting out a portion of your home to help offset the mortgage cost.

You could rent out any of the following:

  • An extra bedroom
  • A studio
  • ADU housing

Even if you’re broke and your credit is bad, you can still buy a house and use the income from your house to pay the mortgage.

Some real estate investors purchase smaller multi-family units that are eligible for favorable financing options, such as FHA loans. By living in one of the units and leasing out the other spaces, they can cover the mortgage costs and sometimes even live in the property for free.

Real Estate Investment Trust

For those looking to buy a property but don’t have the capital to do so, or for those who don’t want to deal with being landlords, real estate investment trusts (REITs) are an ideal solution.

With a REIT, at least 100 shareholders co-own a group of properties or other real estate-related assets. This makes investing in REITs similar to investing in a mutual fund.

REITs are a great way to diversify your portfolio and minimize risk with a low time commitment. With minimal entry barriers, REITs offer investors the ability to invest in a variety of properties without the hassle of managing them directly.


These five letters stand for Buy, Rehab, Rent, Refinance, and Repeat.

This strategy is a fantastic way to get started with real estate investing if you have poor credit and little cash. By securing your first investment property with private money or a hard-money loan, you can turn around and use that money to buy another investment. This lets you continue to invest even if you don’t have perfect credit or a lot of cash on hand.

Some loan programs such as the FHA loan, USDA Loan, or VA Loan allow borrowers with low credit scores and don’t require a down payment. These properties can be used as rentals.

While many people use them for single-family homes, these loans can also be used for 2-to-4-unit multi-family dwellings.

Keep in mind that you will have to live in this property as your principal residence for a period of time and deal with the added stress of living next to your renters.

How Can I Flip a House with No Money?

One way is to find a motivated seller who is willing to do an owner-financing deal. This means that the seller finances the purchase of the property and you make payments to the seller each month.

Another way is to find a fixer-upper that needs very little work and can be purchased for cheap. You can then put in some sweat equity and sell it for a profit.

What’s the Lowest Amount You Can Invest in Real Estate?

The lowest amount you can invest in real estate is $500. This is because you need to have a minimum of $500 to open a real estate investment account.

Can I Invest in Real Estate if I Have a Bad Credit?

There are a few options available for investing with bad credit. One option is to find a cosigner for your investment.

Another option is to find an investment that does not require a credit check.

Finally, you can try to improve your credit score before investing.


If you’re looking for how to invest in real estate with no money and bad credit, there are a few things you can do. With a little creativity and perseverance, you can find ways to finance your investment and make it work for you!

Justin McGill