BiggerPockets Real Estate Podcast

Episode: "I Started with Just $3,500: How I Bought My First Rental Property"

Host: Dave Meyer (Head of Real Estate at BiggerPockets)
Guest: Deandra McDonald (Real Estate Investor, Virginia)
Date: October 27, 2025

Episode Overview

This episode explores realistic ways to begin investing in real estate with little to no savings. Dave Meyer, who started with minimal resources, interviews Deandra McDonald, a successful Virginia investor who began her journey with a $28,000 salary and $5,000 in credit card debt. Together, they cover strategies for beginners, the importance of creativity and hustle, and share hard-earned lessons, especially for those starting from scratch financially.

Key Discussion Points & Insights

1. Can You Buy Real Estate with No Money?

• Dave opens the episode highlighting the myth that substantial savings are required for real estate investing, sharing his own origins in the field.
  • "It is possible to invest without much cash, but it means you'll need to get creative and find other resources or skills that you can bring to the table." (A, 00:39)

2. Deandra’s Origin Story: From Debt to First Property

• Financial Position at the Start:
  • Deandra started as a house hacker with a $28,000 salary and $5,000 in credit card debt.
  • What triggered her to buy: receiving her first rent increase notice.
    • "No matter how low I get my rent...I'm forever going to be threatened with this increase in rent and I just don't want to do it." (C, 01:56)
• Initial Roadblocks:
  • Was denied a loan due to debt and low savings.
  • Paid off debt, aggressively saved $3,500 over 18 months by working multiple jobs (lab tech, bartender, lifeguard, swim instructor), and cut all non-essential expenses.
    • "After 18 months, I had managed to pay off my credit card debt and save $3,500." (C, 04:23)
  • Qualified for an $85,000 mortgage after becoming more financially disciplined.

3. Lessons Learned: Down Payment Assistance Programs

• Deandra notes she could have made it easier by researching city/state down payment assistance.
  • "I would have qualified for those in a heartbeat...sometimes they'll say like, three years. Yeah, five years...You're offering 20% down. You just had to live there five years." (C, 05:09)
• Advice: Always check for available city/state/national programs; many are stackable and accessible to first-time buyers with low income.

4. Creative Ways to Invest with Low Savings

• Partnering:

  • Dave and Deandra both used partnerships to pool resources.
  • Dave: "Another way you can get into this as well with low savings...I got started a third way, which was partnering with people." (B, 07:32)

• House Hacking:

  • Continue to be the most accessible entry for those with less capital.
  • Deandra: "No matter what, house hacking is a good option to get started." (C, 16:44)
  • Multi-unit/primary residence property offers flexibility for friends/family or rental income.

• Sweat Equity:

  • Deandra and Dave stress putting in labor/management in lieu of cash to build credibility and portfolio (e.g., being a live-in handyman, property manager).
  • "I essentially worked for free to earn my equity for several years as a property manager." (B, 20:00)

5. How Much Savings Do You Really Need?

• Rule of thumb: At least enough for worst-case repairs not covered by insurance, and possibly an emergency fund.
• Dave: "What do you think is like the minimum amount of investable capital that you need to get started?" (B, 08:04)
• Deandra: "I would love for you to have enough to replace the most expensive repair in that property that insurance is not going to cover." (C, 08:24)
• Cash requirements vary by strategy:
  • House hacking with assistance: ~$10,000 (depending on market)
  • Standard investment properties: $35,000–$40,000 for down payments plus reserves

6. Responsible Use of Credit

• Use 0% interest credit cards strategically for short-term financing, but only for those with good financial discipline.
• Deandra: "That only works because I have great credit." (C, 12:29)

7. Partnerships: The Value and the Risks

• Experience is critical for attracting funding partners; expect to start with significant work contributions or management responsibilities.
  • "You have to put some input into it. And so if you don't have savings...find the thing that you can contribute to a partnership." (B, 19:52)
• Partnership agreements should be formal and have contingencies.
  • "Just go through the effort of formalizing everything, write it all down, get an operating agreement, talk about what happens if things go wrong." (B, 27:59)

8. Creative & Seller Financing

• Seller financing and other creative strategies can help those with less cash, but discipline and financial habits matter even more.
  • Deandra: "If you have no money because your habits are bad, I don't want to talk to you about creative nothing." (C, 22:49)
• Seller financing is also attractive from the seller’s perspective, allowing for capital gains deferral and steady returns.
  • “I've been watching my 8% checks come in...it comes in and it's wonderful. I own the properties outright now. Their names are on it, but I'm the lien holder.” (C, 29:41)

9. Setting Expectations & Scaling Up

• Don’t expect to buy your dream property immediately; scale according to your experience and cash.
  • "Maybe not going for the Quad Day 1 if you have no experience with anything. Right. Or make sure you have a mentor or someone on your phone..." (C, 32:01)
• Commit to a 7–10 year plan for substantial returns and growth.
  • "If you just commit to seven to ten years, you're going to be good." (B, 32:38)

Notable Quotes & Moments

• On Sacrifice and Discipline:
  • "For 18 months I hustled and I cut all expenses in my house...That's how I was feeling at that moment." — Deandra McDonald (C, 04:23)
• On Down Payment Assistance:
  • "Almost every city in almost every state has them. And you can stack them, you can add it to other loans." — Deandra McDonald (C, 05:05)
• On House Hacking's Versatility:
  • "Sometimes house hacking allows your parents to live with you... Sometimes house hacking allows your children to practice... Sometimes house hacking allows you to support your friends in their times of need. I always think it's a great idea." — Deandra McDonald (C, 16:49)
• On Partnerships Need for Experience:
  • "The idea that you're going to find a partner who's going to give you some sweet deal with huge upside when you have no experience and no capital is probably not going to happen." — Dave Meyer (A, 20:15)
• On Setting Realistic Expectations:
  • "We think it looks like the dream home. It looks like the dream rental, and that is not always the case." — Deandra McDonald (C, 32:02)
• On Compound Growth:
  • "If you do that for five, seven, ten years, you're going to be good." — Dave Meyer (B, 32:53)

Timestamps for Key Segments

• Financial background & first denial: 01:53–04:34
• Paying off debt & extreme saving: 04:23–04:44
• Down payment assistance & missed opportunities: 04:58–06:42
• Creative entry methods (partnering, house hacking): 07:32–09:31
• How much should you save?: 08:24–11:47
• Managing risk via reserves & credit: 11:00–12:47
• Is house hacking for everyone?: 16:44–17:21
• Sweat equity & experience as capital: 18:26–21:09
• Partnerships, expectations, and formal agreements: 27:58–29:15
• Creative/seller financing warnings: 22:07–24:10, 29:29–30:39
• Scaling and goal setting: 33:39–34:18
• Advice: Take it slow, set expectations, long-term focus: 32:01–32:53

Final Takeaways

• Getting into real estate with minimal savings is possible — but requires discipline, hustle, and creative resourcefulness.
• Educate yourself on all available assistance/programs before starting.
• Be extremely honest about your financial skills and habits.
• Partnerships and creative finance are only powerful if you bring value: skills, sweat, or experience.
• Set appropriate expectations: the most important asset is your long-term commitment.
• Systematize and formalize all business relationships to protect relationships and investments.

For anyone considering their first step in real estate investing, this episode is a practical, honest, and motivating roadmap for using the resources you have—and building the habits you’ll need—to succeed.