6 Ways to Invest in Real Estate With a Low Credit Score

6 Ways to Invest in Real Estate With a Low Credit Score

Any time you buy a home or other piece of real estate — at least with a mortgage or through some other type of financing — your credit score is going to play a critical role.

It’s first used to determine whether you qualify for a loan, and then, it will influence what interest rate that loan is assigned. And if your score’s on the lower end? It could mean paying significantly more for your property in the long run.

Fortunately, buying physical property isn’t your only option if you want to invest in real estate. There are many other ways to invest in this lucrative industry, regardless of what your credit score or credit history looks like.

Are you looking to invest in real estate but don’t have stellar credit? Here are six options to consider:

Two people receive keys to a home.

Image source: Getty Images.


More commonly known as REITs, real estate investment trusts are portfolios of income-producing properties. Like with stocks, you can purchase shares of REITs, therefore buying a stake in those properties’ revenues as well.

REITs can be purchased on all three of the major stock exchanges, and you can also purchase shares of REIT ETFs. If you’re interested in a specific real estate sector, you can find REITs focused on mortgages, offices, healthcare, retail, and more. (Want to start off strong? These three REITs are poised for major growth this year.)

2. Real estate stocks

Similarly, you can also invest in individual real estate stocks. These include stocks for brokerages, lenders, homebuilders, real estate platforms, and more. As with any stock, you can buy shares through a brokerage or investment account, and no credit check is required.

Need help choosing the right stock? Give this high-growth one a try.

3. Wholesale real estate

Wholesaling is a type of real estate investing that’s sort of like flipping — except instead of flipping properties, you’re flipping contracts. It works like this: You negotiate a sale price for a property (maybe you know of someone facing foreclosure or a home that needs a lot of work in the area) and sign the contract. Then, you find an investor — typically a home flipper or landlord — and reassign the contract to them for a fee. 

It’s a good amount of legwork, but if you have a strong network, are comfortable negotiating, and are willing to juggle a few contracts at once, it could definitely lead to solid returns.

4. Metaverse real estate

This one might be a little intimidating for the average consumer, but if you’re willing to take a little risk, investing in real estate in the metaverse — a network of virtual worlds that’s been making headlines in recent months — could be the right move. As with other investment strategies on this list, your credit score makes no difference, and you can spend as little (or as much) as you’d like.

Our own Kristi Waterworth is an expert in the area, so if you’re interested in pursuing this emerging investment opportunity, dig through her articles at Fool.com. You can also check out her step-by-step guide to the process.

5. Crowdfund a development deal

Crowdfunding is an easy way to get in on the ground floor of a real estate development, without putting up a ton of cash (or worrying about getting a loan). With this approach, you get together with other potential investors, pool your money, and fund a project or property from the bottom up. 

There are tons of crowdfunding platforms to choose from, too, including Crowdstreet, Fundrise, Groundfloor, and RealtyMogul. Each makes it easy to choose deals, invest, and see returns.

6. List your home or extra room on Airbnb

If you already own a home, you can start your investing journey by simply renting it out — or even just a room in it. You could do so on short-term rental platforms like Airbnb or VRBO, or you could find a long-term tenant and rent it out on an annual basis. Keep in mind that not all neighborhoods and municipalities allow rentals, so check local laws before going this route.

Want to buy a physical property? You have options

If you want to invest in real estate the traditional way — by buying a physical property, your low credit score doesn’t fully preclude you from that. In many cases, you may be able to use an FHA loan to fund your deal. These don’t require huge down payments or higher credit scores like other loans (often in the 500s, depending on the lender).

Your best bet with these mortgages is a strategy called house hacking. With this approach, you buy a multi-unit property with an FHA loan, live in one unit, and rent out the others. The rents you bring in can cover your mortgage payment (and then some, ideally), and after two years, you’re free to move out of the property, rent it out, and buy your next one.

It’s a common and profitable strategy with the right property and lending approach, so make sure you choose a good agent and mortgage lender to help you along the way. They can help you find the most fitting property and financing option for your budget and credit profile.


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