House hacking — the on-ramp strategy
Buy a 2–4 unit property with owner-occupied financing (FHA 3.5% down, VA 0% for eligible veterans), live in one unit, rent the others. The rent typically covers most or all of the mortgage. Repeat every year to build a portfolio with minimal capital.
House hacking is the highest-leverage strategy available to first-time real estate investors. The owner-occupied loan terms (FHA at 3.5% down, VA at 0%) are far better than investment-property terms (20–25% down). You only get them by living in the property — for at least one year, per the agreements.
After one year, you can move to the next house-hack and convert the first to pure investment. Done several times in your twenties and thirties, this builds a substantial rental portfolio with almost no capital. The catch: you have to be willing to live in (and likely renovate) a multifamily building for the first decade of your wealth-building.
Property selection matters more than for any other strategy. Look for: 2–4 units (qualifies for residential financing); the unit you'll live in should be the largest/best; rents in the other units should cover 70–100% of the full mortgage; the building should be in a market where you actually want to live.