Having cash for a down payment is the quick and easy way to enter the real estate market, but it’s not your only option. Many people have found ways to make the best real estate investments with little or no money of their own. Options include borrowing money as well as a number of more unusual and creative paths to ownership.
Related: 9 Ways to Invest in Real Estate With Little or No Money
How to invest in real estate with NO MONEY?
Sounds like everyone’s dream come true! To invest in the best real estate investments with no money! Of course it’s not literally with NO money, but following these tips and guidelines will make investing in real estate so much easier.
#1. Investing without a down payment
- Look into seller financing: the best real estate investments begin when the seller is motivated. If the seller is motivated enough, they may be willing to make it easy for you to purchase by giving you a loan. You could offer to make higher monthly payments instead of a down payment. You could also negotiate a deal where the seller pays your down payment to a traditional lender in order to sell the property faster.
- Lease the property with the option to buy: You can invest in real estate slowly by making payments on a lease agreement until you have the money to buy. Your payments would be credited toward the purchase price.
- Work out a trade: You can pay for real estate by bargaining another piece of property or a specialized skill you have. For example, a contractor could offer a real estate developer labor in exchange for a down payment.
- Take over mortgage payments: If you are interested in investing in a piece of real estate but you can’t afford the down payment, offer to take over the mortgage payments in exchange for the deed. However, you will need to investigate the existing loan before you make such an offer. For example, you could offer to take over a seller’s other debts such as credit card payments instead of a down payment. This is something you could pay off over time.
Related: Tips For Getting a Mortgage For an Investment Property
#2. Co-investing for a down payment:
- Bring in a partner: If you are big on ideas but short on cash, bringing in a partner who will provide the funding and allow you to do the managing might be an attractive option. You and your partner will be able to find the best real estate investments Of course you will need to write up a contract that establishes who is responsible for what, and how the profits will be divided.
- Invest with a building contractor: If you lack carpentry, plumbing and electrical skills to fix up and re-sell a property, partner with someone who does have these skills and could help with the down payment. Once you make a profit on the sale, you will have the down payment for your next real estate investment.
#3. Borrowing money for the down payment
- Borrow money from family/ friends: If you have little or no money on hand and you want to make the best real estate investments, borrowing money from family and friends is another option. Be sure to write up an official promissory note with payment due dates, a specific interest rate, and what ownership, if any, the lender will have in the property. If you pay back the loan on time and with interest, these lenders might be willing to lend to you again for future projects.
- Take out a home equity loan: Find a bank who will allow you to take out a loan for a down payment on top of the mortgage loan you have on your own house. This could be a line of credit or a second mortgage using your home as collateral. Look for a low interest rate that will allow you to purchase the property economically enough that you can still make a profit later on your investment.
- Consider a micro lender: Internet micro lending help borrowers find lenders for relatively small loans, usually under $35,000. Research these sites and familiarize yourself with them.
#4. Finding properties to purchase
Related: Buying Investment Properties With No Money
- Work with an experienced real estate broker: It will cost you nothing to work with a real estate broker experienced in finding properties that have the potential of not requiring a down payment.
- Seek out motivated sellers: These people are desperate to sell for reasons such as bankruptcy, an out-of-town new job, poor condition of the property, behind on payments, etc. They will be more open to providing funding to close the deal quickly.
- Search online for properties that offer incentives: These can include little or no down payment or seller financing.
For as long as anyone could remember there have always been ways to profit from real estate investments without money or credit. Knowledge is power and the information is out there! The funding is out there you just have to get up and look! President Donald Trump got started in real estate by placing deals together with very little money or credit of their own. Their success is all based on having the right information, making the right connections, and implementing the right strategies. So there are no excuses for investors because always keep in mind that if there is a will there is a way! Be sure to check out Mashvisor for the latest real estate market trends and helpful guidelines on investing in real estate.