When you’re looking for how to start a real estate business with no money, you can expect to do one major thing: borrow. Just because you have little to no money in your own pocket, does not mean you can’t get a little cash from someone else’s pocket.
Here, we show you how to start a real estate business with no money!
How to Start a Real Estate Business With No Money
Now let’s go over all the ways you can finance your real estate business with no money!
Hard Money Lenders-Finding How to Start a Real Estate Business With No Money
The first approach of how to start a real estate business with no money is through hard money lenders. With a hard money loan, you are borrowing from professional real estate individuals. Meaning these people normally know their stuff. Real estate investors like you will take this approach rather than going to a bank.
This is due to the fact that hard money loans don’t go through any corporate procedures. They also usually have looser qualifying criteria, so requirements can be met easier and the loan can be secured faster. Another pro of hard money loans is that these private lenders are much more open to supporting risky projects. Real estate investing risks are inevitable in the real estate business, so having a way to fund them is always convenient.
You do need to be cautious when it comes to working with hard money lenders. You need to be confident enough in your ability to pay back hard money loans as quickly as possible.
Hard money loans tend to have higher than normal interest rates and normally require a sizeable down payment or personal collateral. Terms are also normally much shorter than traditional loans, averaging at about a year or two. Bottom line is just to make sure you know what you’re getting yourself into when you’re signing the dotted line.
Microloans-Journey to Find How to Start a Real Estate Business With No Money
When you’re answering the question of how to start a real estate business with no money, you can consider microloans. Microloans focus mainly on newer businesses or startups, so if you start a real estate business, this may be your shot to fund it.
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Related: Starting a Real Estate Business in 2018: Investment Property Companies
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From the sound of the word, you can tell that these loans are smaller than your typical bank loans. Borrowing a lower balance means these types of programs are less strict in their terms. You will be able to qualify for a microloan easily, as their requirements are not extreme. Your credit score, for example, doesn’t need to be top notch. That is one comfort you can check off if you’re concerned about borrowing more than what you can.
How to Start a Real Estate Business With No Money-Real Estate Crowdfunding
Real estate crowdfunding is a fairly new and innovative way to fund a real estate business. Although the idea of fundraising has been around for centuries, real estate investors have recently taken advantage of crowdfunding.
Figuring out how to start a real estate business with no money just got easier. Real estate crowdfunding has become one way for real estate investors to be diverse and build the best investment portfolio at a much lower cost.
Real estate investors like you can take a look at crowdfunding real estate platforms to select crowdfunding real estate projects to participate in. This gives you the opportunity to finance shares of the real estate property at a low cost (sometimes even as low as $1000.) You can even collect a portion of the profits or rent payments once the crowdfunding real estate projects have been completed.
Related: What’s All This Real Estate Crowdfunding?
You can, however, expect risks of real estate to come with it. Real estate investors like you have less control over the outcome than normal real estate investment opportunities. Keep in mind that you may wait longer for a return on investment, all depending on how the real estate deal is structured. Whether you’re looking into crowdfunding for real estate deals or just trying to come up with how to start a real estate business with no money, crowdfunding is a choice to consider.
How to Start a Real Estate Business with No Money? No Problem: SBA Loans
These are what we call the Small Business Association loans. The SBA is able to offer banks a guarantee of loan repayment so long as they would be open to underwrite loans for new entrepreneurs (you!) This “promise” allows banks to be willing to take on more risks, giving you a better chance to borrow.
The loan’s affordability all depends on your unique situation. These types of loans normally have higher borrowing limits, something around $2,000,000! SBA loans come with longer terms, lower down payments, and protection against any balloon payments- all of which can help your real estate business establish stable cash flow.
We want you to keep something in mind! Taken that these are “small business loans,” you will not be able to use these loans for investing in real estate. You can, however, use it to answer “how to start a real estate business with no money.” Real estate businesses, like a real estate investment brokerage or residential property management, are eligible for this type of funding.
Other than being subject to high fees, your credit score should be pretty up there. Your tax returns should also be able to show a good amount of profit to qualify for these types of loans. The application process also tends to be lengthy and may even require you to put up personal assets as a form of collateral.
Wrapping Up How to Start a Real Estate Business With No Money
Getting the hang of how to start a real estate business with no money is not easy, but it is doable with the right willpower and strategic planning. If you think these methods of funding a real estate business will work for you, then go for it! These are only some of the many methods you can use to find the funds for your real estate business.
We salute you for your courage to start a real estate business with no money, and we are sure you will be able to make it work with your strong will and determination. Mashvisor is always here to give you real estate investment analytics, and a couple surprises if you decide to go with the real estate agent business. All in all, we are here for you, and we hope we answered your question of how to start a real estate business with no money.
Related: How to Start a Real Estate Business with Little or No Initial Capital
