Many residential real estate investors take one look at the price tag of a multifamily investment property and run in the opposite direction. These real estate investors never even bother to wonder how to buy a multifamily property with no money (or little money). This is a major real estate investing mistake. Don’t miss out on opportunities to make money in real estate investing with multifamily homes just because you never ask the right question: “Can I buy a multifamily home with no money down?”. Ask the right real estate investing questions, and we, at Mashvisor, will provide you with the right answers. Let’s take a look at all of the different ways of how to buy a multifamily property with no money or little money down.
If you’re new to multifamily real estate investing, read: Understanding Multifamily Investment Property Returns and Benefits.
How to Buy a Multifamily Property With No Money: Consider Investing in a Duplex House
A duplex house is a great way of how to buy a multifamily property with no money. Technically a residential real estate investment property, a duplex house qualifies for an FHA loan. Of course, the real estate investment strategy of an owner-occupied rental property would have to be implemented in order to qualify for an FHA loan. However, with this type of investment property loan, the down payment can be as little as 3.5%. Compare this to the traditional 20-30% down payment of a conventional bank loan, and it’s all the more reason to opt for an owner-occupied duplex investment strategy.
How to Buy a Multifamily Property With No Money: Look for an Equity Share Investor
Once you find a promising multifamily real estate investment property, look for an equity share investor. An equity share investor is essentially a real estate investor who will own equity in the multifamily real estate property in return for providing funds for the purchase. For example, if the equity share investor offers $150,000, you might give him/her 30-40% of the equity in the multifamily real estate investment (depending on the value of the property).
As an equity share investor, he/she will be entitled to a percentage of the monthly cash flow. When you choose to sell the multifamily real estate investment, the equity share investor will also receive the same percentage of the profits from the sale. This is why many real estate investors are willing to become an equity share investor: the promise of either long-term passive income investments or a quick return on the investment from a sale.
Of course, you need a great investment property to convince anyone to become an equity share investor. Let Mashvisor assist you in your investment property search. To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Finding an equity share investor requires a real estate investment network. Don’t have one? Then you need to read “Build the Dream Real Estate Investment Network in No Time”.
How to Buy a Multifamily Property With No Money: Turn to Real Estate Syndication
Speaking of finding an equity share investor, really any form of real estate syndication is an option for how to buy a multifamily property with no money. Real estate syndication is when real estate investors come together to provide investment property financing for a real estate investment. There are a few forms, most popular of which are:
Real Estate Partnership: Teaming up with another real estate investor who has more financial resources than you do is one form of financing investment properties through real estate syndication. Similar to finding an equity share investor, a real estate partnership means that the other real estate investor gets something from the real estate investment. It could be equity or simply a return on investment on the money put forth. Real estate partners might even share the responsibility of rental property management; it all depends on what agreement you land on.
Real Estate Crowdfunding: Real estate crowdfunding is a newer phenomenon that has made buying multifamily property with no money even more achievable. With real estate crowdfunding, you can go with one of two real estate investing routes:
- Invest with no money and be the one responsible for the multifamily real estate investment.
- Invest with very little money (as low as $500) and receive passive income from a multifamily real estate investment.
Either real estate investing route will allow you to buy multifamily property with no money.
How to Buy a Multifamily Property With No Money: Borrow from Hard Money Lenders
Another alternative to the expensive down payment of investment property financing from a traditional bank is hard money lenders. Hard money lenders focus only on the earning potential of a multifamily real estate investment property and not on your credit history. While this means performing a thorough investment property search to find the best real estate investment property, it will get you a better deal with hard money lenders who often require no down payment.
Find the best investment properties with Mashvisor’s rental property calculator. To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Keep in mind that you’ll be facing higher interest rates and a shorter amortization period. Still, hard money lenders are a good option for how to buy a multifamily property with no money.
How to Buy a Multifamily Property With No Money: Find a Private Money Lender
The final option for how to buy a multifamily property with no money is finding a private money lender. This might be the most difficult of the investment property financing options listed, especially if the private money lender has no ties to real estate investing or a property investment company. A private money lender could be a family member, a friend, or someone in the community who has the financial means to help a real estate investor buy a multifamily property.
In order to make requesting money from a private money lender easier, you’ll need to perform real estate market analysis and investment property analysis to ensure you have a great multifamily real estate property on your hands. How else will you convince a private money lender to give you the funding? Be sure to have a plan set out on how you will get a return on investment. Make sure the private money lender understands what you expect from him/her and where his/her involvement in the real estate investment begins and ends.
“Can I buy a multifamily home with no money down?” Yes, you can if you look into any of the options for how to buy a multifamily property for no money mentioned above. Real estate investing is possible with little or no money, even when venturing into multifamily real estate investing. You just have to be well educated on all of your options to get started.