A financially independent property investor shares 2 low-risk strategies to get into real estate on a budget

• Whitney Elkins-Hutten shares low-risk real estate strategies for rookie investors.
• Elkins-Hutten, now financially free, quit her job in 2019 to invest in real estate full-time.
• She recommends house hacking and live-in flipping to offset costs and build capital.

After a decadeslong real-estate investing career and various strategy shifts , Whitney Elkins-Hutten considers herself financially free.

The Boulder-based investor, who says she had 36 single-family homes at the peak of her long-term rental business, quit her day job in 2019 to invest in real estate full-time. As of 2024, she primarily does partnerships on bigger deals. She also runs a financial education company and is the author of " Money for Tomorrow ."

The real-estate maven shared two low-risk, low-cost strategies for rookie investors looking to test their interest before diving head-first into property investment.

1. House hack

A popular beginner-friendly strategy known as "house hacking" involves renting out a portion of your home to offset your mortgage.

"Buy a house and rent out the rooms to roommates, or buy a duplex and rent out the other side," explained Elkins-Hutten.

It's cost-effective for two main reasons: One, since you're living in the property and it's considered a principal residence, you may qualify for an FHA loan. This is a government-backed mortgage that allows down payments as low as 3.5% and comes with a more lenient credit score standard. One of the requirements is that the loan must be for a primary residence — not a vacation home or an investment property (unless you live in one of the units).

A small down payment can lower your upfront costs significantly, especially if you live in a pricey market. House-hacking can also lower your monthly housing payment — or even completely eliminate it depending on how much rent you have coming in from your tenant(s).

If you don't want to share a space or a wall with roommates, another option is buying a house with an ADU (accessory dwelling unit) or a mother-in-law cottage that you could rent, said Elkins-Hutten, noting that: "In some towns, like here in Boulder, they're actually incentivizing people to put ADUs on the property. I know many towns along the West Coast have proposals for high-density housing where they want you to build ADUs on your property ."

2. Buy below value, renovate, and avoid tax on the sale through the 121 Exclusion

Another option for rookie investors who want more privacy is " live-in flipping ." Elkins-Hutten used this strategy early in her career to acquire enough capital to start buying long-term rentals, which ultimately led to her financial independence .

"If you're just like, I don't want anybody else on my property but me, then that's where I think the buying a single-family home, trying to force the value on the property as much as you possibly can, and then selling the property and keeping as much money tax free through the 121 Exclusion is a good option."

That's essentially what Elkins-Hutten did: She'd buy a property "that needs love," she said, and renovate the home to "force the appreciation on the property."

She'd live in the property while renovating it for at least two years in order to capitalize on an IRS rule known as the Section 121 Exclusion. This lets taxpayers exclude up to $250,000 ($500,000 for a couple filing jointly) of the gain from the sale if they've used the home as a primary residence for at least two of the five years preceding the sale.

"It's great for people that don't have a whole lot of money to get started because you could get a first-time home buyers loan and go in at 3% down or 5% down on a property to start off," she said.

"When somebody tells me they can't get started in real estate, their obstacle is usually something else: lack of motivation, lack of perseverance, or lack of creativity and resourcefulness. There are so many ways to get started in real estate."