Many people dream of owning rental properties that give them consistent cash flow or help them retire early, but how much money do you need to invest in real estate? In this article, we’re breaking down the costs, line by line, so that you know exactly what to expect when buying a rental property. Keep reading!
Summary:
Many people assume you need at least $100,000 in cash or enough money to buy a property outright, but this is not always the case. Unlike most investments, rental properties can be leveraged. This means that $50,000 could be your 20% down payment on a $250,000 rental property. Based on median home prices, LendingTree estimates the average 15% down payment to be around $62,535.
While the amount of cash you’ll need is highly dependent on your property’s purchase price and your lender’s terms, there are certain costs for you to keep in mind. Here’s a full breakdown of what you can typically expect to pay:
15%-20% or more is standard for an investment property down payment. So, if you’re buying a $400,000 rental property, you’d need to bring the first $80,000. Other properties, like Rent to Retirement’s new build rentals, only require 5% down. This means that the same $400,000 purchase would only need a $20,000 down payment.
Get your first rental property for only 5% down!
Every investor should have additional funds in the bank when buying a rental property. Why? To account for the unexpected! You could have a multi-month vacancy, or your property could require a major repair. A good rule of thumb is to keep at least six months of mortgage payments to cover the bills in a worst-case scenario. For many properties, this will be at least $10,000.
Many properties require some work after closing, so make sure you budget for renovations accordingly. For normal, cosmetic updates, set aside at least $5,000-$10,000. Larger projects may require upwards of $50,000. If you buy turnkey, your property will already be renovated or newly built, meaning you won’t have the added costs (or headaches) of fixing a house!
In addition to your down payment, you’ll need to bring closing costs to finalize the sale. These often include inspection, title, escrow, and origination fees, as well as prepaid property taxes and insurance. According to Bankrate, the national average for closing costs is $4,661 (as of September 2025).
With a down payment, reserves, rehab costs, and closing costs, you should expect to be in the ballpark of at least $40,000. This can be trimmed to $35,000 if you’re buying a property that doesn’t need renovations (like a new build) and trimmed even further if you get closing credits or cash back at closing with Rent to Retirement’s exclusive builder incentives!
If you don’t have $40,000 lying around, all is not lost. These strategies can help you get your hands on more cash or buy a property with less money out of pocket:
If you don’t have enough for a down payment, find someone who does! Many investors are looking for opportunities to make decent returns on their money, and there are multiple ways to structure a partnership. Pay the partner back over time with interest, or give them an equity stake in the property and share the cash flow.
The reality is that you might not have enough for a down payment because the properties in your market are too pricey. If you can’t find properties within your budget, pick a market with more affordable home prices. Remote real estate investing allows you to live hundreds of miles away while a property manager handles the day-to-day for you!
Rent to Retirement’s new builds are turnkey, meaning you won’t need to put money aside for renovations. This, along with builder concessions—like closing credits or cash back at closing—could help you get into a new-build rental property for significantly less!
If you don’t feel comfortable forming a partnership or investing in another market, double down on saving money and investing. The more cash you can put away each month, the faster you’ll be able to fund your down payment, reserves, renovations, and closing costs with your own cash!
Think you already have enough money saved to buy a rental property? Work through this simple checklist to start investing!
You can use our calculator!
Not everyone has six-figure capital to deploy, but with Rent to Retirement’s 5%-down loans for new builds, you could buy a brand-new turnkey rental with half of the typical upfront investment (or less!).
But that’s not all. In addition to a lower down payment, you can also choose one of three exclusive builder concessions: closing credits, cash back at closing, or an interest rate buydown!
If you’re buying a rental property, you’ll likely need enough money for a 20%+ down payment, plus reserves, renovations, and closing costs. On a $400,000 property, this could amount to $100,000 or more, but by buying a turnkey rental with one of Rent to Retirement’s 5%-down loans, this could be much closer to $40,000!
$20,000 could be enough to invest in real estate, but if you’re buying a rental property, you may need to find a partner who can help cover your down payment, reserves, renovations, and closing costs. However, with Rent to Retirement’s 5%-down financing, you could buy a turnkey property (no renovations needed!) and make your $20,000 go much further.
You likely won’t be able to buy a rental property with just $100, but you can buy shares of REITs (real estate investment trusts). These are companies that buy and manage real estate, and they are required by law to distribute at least 90% of their income to investors through dividends. This is a great entry point into real estate investing and a simple way to make passive income!