Real estate investing is one of the easiest ways to build wealth and it’s totally open and accessible to everyone. It has become a popular way for people to make money, and it is not unusual to buy properties without any intention of living there. Some people simply buy and hold property, waiting for it to appreciate in value before reselling it.
People often ask if it’s possible to invest in real estate with little or no money. Having cash for a down payment is the fast and easy way to enter the real estate market, but that isn’t your only option. We found some ways you can start investing in real estate with little or no money of your own. Options include borrowing money as well as a number of more uncommon but creative paths to ownership.
Listed below are tips on how you can invest in real estate with little or no money.
1. Taking Over Someone else’s Mortgage Payments
Are you interested in investing in a land or house but you can’t afford the down payment? You can offer to take over the mortgage payments from the owner or maybe someone in distress, in exchange for the deed. However, you will need to find out about the existing loan before you make such an offer, this is because some mortgage loans have specific contracts that prevent this type of transaction.
2. Bringing in an Investment Partner with Cash
If you have great ideas but you’re short on cash, bringing in a partner who will provide the funding and allow you to do the managing is an alternative. To go this route, you’ll need contracts that states clearly who is responsible for what, and how the profits will be divided.
If your partner is strictly in for financial support, make sure you retain all control over the day-to-day management of your investment.
3. Borrowing from a Bank or Getting a Loan
Another way you can invest in real estate with little or no money is by getting a loan. Find a bank who will allow you to take out a loan for a down payment. You’ll need to have something substantial 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. The most important thing is to make sure you can pay back this loan or you risk losing your collateral.
4. Buying from Motivated Sellers
These sellers are desperate to sell for reasons such as bankruptcy, divorce, death of a relative, 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. Leverage relationships with real estate agents and consultants, they can help provide information on who might be in this situation.
5. Borrowing from Family or Friends
Although if you can avoid it, it’s best not to borrow then again, this is another alternative, 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.