Becoming a real estate investor with little or no money down is something that appeals to many people who have bad credit or no credit at all to invest in real estate. In this blog, we will show you how to become a real estate investor with no money.
When we talk about investing in real estate without money, what we mean most of the time is taking advantage of other people’s money to become a successful real estate investor. After all, if you have the ability to recognize good investments from bad ones, then you should not let having no money stop you. So, what are the best ways to invest in real estate with no money?
Related: Top Six Real Estate Investment Strategies
How to Become a Real Estate Investor with No Money: 7 Ways That Work
1- Real Estate Partnerships
One of the simplest ways to invest in real estate with no money is to partner up with other real estate investors. There are many real estate investors out there who want direct exposure to investment properties but just don’t have the time to run the show themselves. Here is where your role comes in. As an ambitious real estate investor, you can approach other investors and sell your partnership idea.
Note that for this strategy, it is better to have some experience and credibility that you can prove to other real estate investors. If you can showcase studies of your previous investments, then you can sell the partnership idea more easily.
Structuring a real estate partnership is another reason why this strategy might not be suitable for beginner and inexperienced investors. A real estate partnership can have two structures, either a debt or an equity structure. In an equity partnership, partners put in the money and get paid out from the cash flow the investment generates, which means you have to share profits with them. In a debt partnership, you commit to paying interest and the full loan as a lump sum.
2- Real Estate Wholesaling
In real estate investing, house wholesaling is the process of finding distressed properties that are listed below their market value, negotiating a deal with the property owner, then transferring the contract to another buyer and charging a fee.
Pulling off a successful real estate wholesaling deal is not as easy as it sounds. First of all, you need experience in negotiating contracts and a real estate network in order to find potential buyers.
Still, learning how to become a real estate investor with no money becomes a reality with wholesaling. Despite being a complicated strategy, you have the chance of making money in real estate without spending anything.
3- Fix and Flip
A fix and flip investment is another real estate strategy that you can pull off with little capital or no money down. The main idea behind a fix and flip investment is finding a distressed property, renovating it, then selling it for profit.
You might be wondering how you’re going to finance a fix and flip project if you have no money in the first place. Simply put, your financing options are limited to having partners or getting a fix and flip loan from traditional investors. Moreover, you can opt for hard money offered by private money lenders.
4- Home Equity Loans
Financing real estate investments by accessing your line of credit is one of the most common real estate investment strategies. A home equity loan is basically a line of credit from your own property, which is offered by many banks allowing you to use the capital that is already built in your own home.
Make sure to use home equity loans wisely and for calculated real estate investments. If things go down, you risk losing your home to the bank, since it will be used as collateral for your mortgage.
5- Become an Owner Occupant with FHA Loans
The Federal Housing Administration offers low down payment loans (as low as 3.5%) for real estate investors who invest in residential multi family rentals (2-4 units) and make the property their primary residence.
Becoming an owner occupant means that you can rent the remaining units for cash flow and live for free. All you have to do is learn how to find positive cash flow properties that guarantee a profitable investment.
6- Private/Hard Money Loans
Unlike traditional bank mortgages, hard money is much easier to obtain as private money lenders tend to be more flexible and have fewer requirements. The only difference between hard and private money in investment property financing is that a private money lender can be anyone such as a friend or family member, while hard money lenders are businesses that are more structured and have certain criteria upon which they base their practices.
Related: Buy a Rental Property Using a Mortgage or Cash?
7- Seller Financing
Seller financing (also known as owner financing) is another term for a purchase-money mortgage, which is when the property owner transfers ownership to the property buyer who signs a mortgage agreement directly with the seller.
This method is popular among residential and commercial real estate investors who either cannot qualify for a traditional mortgage or are able to negotiate a better owner-financing deal.
The Art of Finding Profitable Investment Properties
So, how to become a real estate investor with no money? Whether you have money or not, learning how to find the best real estate investments is what determines your success as a real estate investor. Looking for properties that qualify for an owner-occupied FHA loan? Pitching a real estate investment opportunity to your potential partners? Mashvisor can help you in doing all that thanks to our state-of-the-art real estate investment tools. Check out how to find investment properties with the property finder, analyze neighborhoods with the heatmap analysis tool, and evaluate investments using the best rental property calculator you could ask for.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Related: How to Start a Real Estate Business with Little or No Initial Capital