The question that every beginner real estate investor asks is whether investing in real estate with no money is possible or not. The answer is YES! You can invest in real estate and make money with little or no funds at all! But just because you can do it, it doesn’t mean that you should do it. So, is it a recommended practice? What are the risks associated with investing in real estate with no money? Continue reading this blog and learn about the best real estate investment strategies that will help you make money in real estate with no money.
Investing in real estate with no money is possible, but it is not easy at all. It requires hard work and strong determination. As a beginner real estate investor, you should set your focus on how to close your next deal no matter how much or how little money you have. In other words, if you are looking at a real estate investment opportunity that can easily turn into a profit, then don’t think twice! Go out there, create a plan, and set your targets!
What are the possible ways for investing in real estate with no money?
Real estate wholesaling
Real estate wholesaling is a very common strategy among real estate investors, especially those with little funds or no funds at all. Real estate wholesaling is all about finding properties that are for sale under market value or negotiating a good price with owners and putting the property under contract. After finding the property, you must find another investor or home buyer who is willing to buy it. So, your role here as a wholesaler would just be matching a seller and a buyer together and getting paid to do so without holding title to the property.
Real estate wholesaling is a highly recommended strategy although some risks associated with it can be pointed out:
- Finding a potential buyer is not as easy as it sounds. Many beginner real estate investors fail at wholesaling just because they lack the basic know-how needed to find potential property buyers.
- Some properties require repairs to attract potential buyers. You should carefully plan your wholesaling strategy to avoid extra costs that might be incurred. After all, you are investing in real estate with no money!
One of the simplest ways for investing in real estate with no money is fix-and-flip. It is possible to do a full project without money from your own pocket. You just have to find someone who is willing to partner up with you and share risks and profits 50/50. Another option is to apply for a fix-and-flip loan from a bank or look for other financing options such as private money or hard money lenders. It is good to mention here that using private money or hard money loans is more suitable for inexperienced flippers who need money quickly, whereas bank loans are more suitable for buy-and-hold real estate investors.
When it comes to flipping homes with no money, the goal is to get into the project with no money from your pocket, negotiate a good deal, rehabilitate the property, sell it, and make profit!
If you are considering investing in real estate but you don’t have sufficient funds to do so, then renting with the option to buy, or sometimes called the “lease option,” might be a good investing strategy for you. Basically, it is a rental agreement that includes the option to buy at the end of the agreed rental period. With the lease option, you can control the rental property for the duration of the contract or even sublease it and collect money on a monthly basis. In other words, the lease option allows you to buy a rental property without having money for a down payment.
Using private money and hard money lenders
A popular way to finance your real estate investment, especially when you are investing in real estate with no money, is by using non-traditional lending sources. Private money and hard money lenders are not banks, but rather individuals and investors who are can give you asset based loans. The only difference between the two is that private money lenders can be any private source like a friend, a family member, or an investor, while hard money lenders are businesses that have certain lending criteria, such as defined durations and interest rates. Private money lenders are more flexible, but hard money lenders are easier to find!
When using private and hard money lending resource, you should consider the high fees and high interests rates that you have to deal with. So, work out your numbers and see if this strategy can be favorable for you!
Partnering up with investors
Do you want to become a real estate investor, but have no money? No problem! If you have an idea but lack the funding, then find yourself some real estate partners. Creating a real estate partnership can be a mutually beneficial way for investing in real estate with no money if done right. Before starting the partnership, discuss with your real estate partners the future aspects such as goals, risks, return on investment, and the role of each partner. In this way you will avoid future disputes between investors that may harm your real estate investment.
Conclusion on investing in real estate with no money
Investing in real estate with no money is feasible and can generate you profit, but it is also risky and not easy to do. There are many ways to make money in real estate without money, but each way requires hard work and sacrifice. You need to have the guts to talk to lenders, buyers, and potential partners and carefully plan the real estate investment strategy you choose.
Meanwhile, to get more real estate knowledge, keep reading on Mashvisor.