The ability to understand, recognize, and take advantage of other people’s money is the hallmark of successful real estate investors.
Because they’ve mastered the art of how to invest in real estate with no money of their own.
For newer and financially strapped investors, this is an attractive way to get a foot in the real estate door without having the financial resources and credit to do so.
Veteran investors, on the other hand, have found that using other people’s money liquidates their available funds and frees up their cash to invest more, and ultimately make more.
If you want to learn how to invest in real estate with no money of your own, you are in luck.
If for nothing else, it’s entirely possible to get started without investing your cash.
That said, if you don’t intend to invest your own money, there is something else you need: a trustworthy network.
The trick is in knowing who can help you, and how to use them to your advantage.
There is no doubt about it: real estate investing with no money out of your own pocket is possible.
You don’t need endless cash reserves of your own to acquire a deal.
You just need to know how to invest in properties with the right people at your side.
If you want to invest in real estate with no money of your own, may I refer you to the following?
[ Need money to invest in real estate? Download our FREE real estate Report now to learn how to fund real estate deals with little to no money of your own. ]
10 Ways To Invest In Real Estate With No Money Of Your Own
There are many investment deals that transpire throughout the real estate market on a yearly basis.
The majority of them are achieved through traditional lenders and institutions like banks, but some are accomplished through less traditional means.
In most cases, it’s because the investor couldn’t raise the capital or didn’t have enough capital to do so.
Here are 10 ways to invest in real estate with no money:
- Hard Money Lenders
- Private Money Lenders
- Equity Partnerships
- Home Equity
- Option To Buy
- Seller Financing
- House Hacking
- Government Loans
It’s important to note that, while investing in real estate with no money down offers numerous benefits, not all cashless deals are worthwhile.
There are, however, situations where utilizing these options makes more sense.
Consider the fact that cash buyers are viewed as more direct than conventional loan purchases when compared to traditional loans, which are slow to fulfill.
With cash in hand, this strategy can provide an unprecedented upper-hand at the negotiation table.
For investors with the financial capability to purchase a property through traditional means, it’s important to remember you still have options available.
The following provides an understanding of the many ways you can invest in real estate with no money of your own:
1. Hard Money Lenders
Unlike private money, hard money lenders set forth fees in the form of points.
Ranging from three to five, these points represent an added, upfront percentage fee based on the borrowed amount; this is on top of the interest rates hard money lenders charge, which range between 10 and 18 percent.
Fees and interest rates are not universal with hard/private money lenders, so investors need to do their due diligence.
2. Private Money Lenders
Private money loans, which bring speed and efficiency to every transaction, will typically cost investors somewhere in the neighborhood of 6 and 12 percent interest on the money borrowed.
The most popular course of action when financing real estate deals with no money down is through the use of hard or private money lenders.
These loans are not given from banks, but rather individuals and businesses aimed at financing investments for a return.
Also, these loans are generally comprised of their own set of criteria, which also include more fees and higher interest rates to deal with.
When using these types of lenders, a good rule of thumb is to find homes that can be purchased for 50 cents on the dollar.
As the introductory course to real estate investment, wholesaling requires neither a high credit score nor large sums of money down.
Instead, it simply comes down to having the right numbers in place.
Real estate wholesaling, at its core, consists of finding discounted properties, assigning the contract to a potential buyer, and getting paid to do so.
4. Equity Partnerships
A very common path in real estate investment is through partnerships.
What one investor lacks, the other can make up for — and many partnerships will entail one partner finding a distressed property at a discounted price, while the other one uses their credit score and working capital to finance it; just make sure everyone is bringing something to the table.
For better investors, aspects such as goals, risk, roles, and returns should always be discussed before creating any type of partnership.
5. Home Equity
An alternative option for investors with no upfront money is home equity.
This can be a viable option since property values have gone up in recent months, meaning there could be more capital available than you think.
For investors looking to capitalize on this route, there are generally two options: rewrite the first mortgage and do a cash-out refinance, or keep the first loan in place and add a home equity line of credit.
6. Option To Buy
Sometimes referred to as a “lease-option,” this method allows investors to acquire properties without initially taking legal ownership.
However, the investor will sign a legal “option to buy” from the homeowner at a specific price in the future.
In return, the investor rents the property out on a long-term basis with an agreement in place to purchase the property at a later date for a previously set amount.
7. Seller Financing
Unlike traditional loans, seller financing works like this: the investor purchases the property from the homeowner/seller, rather than a bank, and the two sides sign an agreement that states an interest rate, repayment reschedule, and consequences of default that both parties have agreed upon.
8. House Hacking
House hacking, as its name suggests, is a real estate strategy that awards savvy investors the ability to take advantage of a unique situation.
More specifically, however, this particular exit strategy will witness investors earn rental income by renting out their primary residence.
Those with multi-unit homes, for example, may choose to rent out the units they are not living in.
That way, the rent generated may help pay for the mortgage, allowing the owner to potentially live mortgage-free.
Those in single-family homes, on the other hand, may elect to rent bedrooms when they can.
Either way, house hacking allows investors to simultaneously mitigate the risk of vacancies will building cash flow.
9. Government Loans
Government loans are perhaps the most well known of all the sources of funding made available to today’s investors.
It is worth noting, however, that there are aspects of government loans that are not perfectly suited for rehabbing homes for a quick profit.
What’s more, nearly all government loans can take months to receive approval, making them less attractive than just about every other option on this list.
This is largely useful when you are trying to invest in real estate with little or no money.
You can purchase a home as your primary residence with zero cash down, stay in the home for a one-year minimum, then turn the home into a rental property upon moving out.
Building equity also includes your primary residence not just your rental properties.
It is common practice to live in properties you hope to turn into rental properties first as to avoid harsher lender rules.
This strategy can help those who are just starting to invest in real estate with little of their own money.
With a low down payment along with an influx of rent, you can cover a substantial portion of your mortgage payments.
As the peer-to-peer economy continues to shape the way real estate investors do business, microloans will remain a viable option.
Issued by individuals, as opposed to banks and credit unions, microloans are yet another branch of peer-to-peer lending making it possible for people to invest in real estate.
Microloans can be issued by a single lender or aggregated across several investors, each of whom are expected to contribute a portion of the total amount the borrower needs.
Learning how to invest in real estate with no money down is important as an investor, but it’s not always your only option.
Do you know how to invest in real estate with no money out of your pocket?
There are several ways to begin investing today even with a low cash.
Review these options, and you can turn your financial situation around while jumpstarting a new career.
Now that you know you can, are there more opportunities you would like to pursue?
Since it is possible to buy real estate with no money of your own, what will you do next?
Ready to start taking advantage of the current opportunities in the real estate market?
Whether you’re brand new to investing or have closed a few deals, our new FREE real estate Report will cover everything you need to know to help you get started with real estate investing.
Top Real Estate Expert investor explains the best real estate strategies to help get you on the path towards a better financial future.