Do you want to invest in commercial or residential properties but you have bad credit? If YES, here are 20 guaranteed ways to invest in real estate with no money.
The real estate industry is not only huge but it is an industry where extra income can be made depending on the scale of your investment. Even though the real estate industry is one that demands lots of huge investment, there are ways that you can invest in this industry with little or no money especially if you align yourself with the right people; you should however be aware that you might not have as much flexibility as someone who has huge cash to invest with.
How Possible is It to Invest in Real Estate With No Money?
As a new investor, having no money to invest while going into real estate is one way of getting your foot into the door. Those who are already Veterans in the real estate industry have not only mastered the art of investing in real estate with no money but they also have the opportunity of using their free funds to invest in something else. Once you have a trustworthy network, it is very easy for you to use those in your network to your own advantage.
The many investment deals that transpire across the real estate industry every year are achieved through traditional and non-traditional means. Investors that opt for the less traditional means do so because either they could not raise the appropriate capital required to do so or did not have a superb credit score.
Even though there are various opportunities for those looking to invest with no cash, it should be noted that not all opportunities are worthwhile and that investors without cash that receive a whole lot of benefits are ones whose credit scores are top notch. Below are 20 tips on how to invest in real estate with no money;
20 Guaranteed Ways to Invest in Real Estate With No Money
In real estate, wholesaling has to do with finding properties that are discounted, and then assigning the contract to a potential buyer who pays you. For investors who intend to wholesale, you do not need large sums of money or for that matter a high credit score, all you need is to ensure that the right numbers are in place.
2. Hard Money Lenders
This is one popular way investors without cash use. Hard money lenders are individuals or businesses that are looking to invest their own money for a return which will be based on the value of the property. Unlike loans from traditional banks, these loans usually have their own criteria such as higher interest rates and fees. It is important that you thoroughly understand the real estate industry in order to know where to look so that you can make maximum profit from this option.
This is very common in the real estate industry as those without cash but with knowledge of the industry and can easily find distressed properties at a discount and partner with those that have the available funds and good credit scores. Before any sort of partnership is created, it is best to set goals, know the roles of each partner, the risk involved and what the returns should be.
4. Option To Buy
This is also referred to as the lease option. This allows the investor to be able to acquire a property without first taking legal ownership of the property. The investor will however sign a legal ‘option to buy’ from the homeowner in order that a specific price be paid at a futuristic date. Once the document has been signed, the investor can then rent out the property on a long term basis before then purchasing the property for the agreed amount according to the signed document.
5. Seller Financing
In seller financing, the investor purchases the property directly from the homeowner rather than the bank. In order for this to occur, an agreement has to be signed stating the interest rate agreed upon, the repayment schedule as well as what consequences should prevail should any of the party default.
6. Home Equity
In home equity, there are two options for the investor; keeping the first loan in place in order to be able to add a home equity line of credit or rewriting the first mortgage and then do a cash out refinancing. The home equity option is viable if property values have gone up in a recent period.
7. Private Money Lenders
In this option, you could approach wealthy individuals who are looking to earn more on their investments than what they are getting from the stock market. Most real estate investors without money using this option usually offer the intending investors between 12 and 20 percent return on their investment that is usually secured by a lien on the property.
8. Use a ‘Subject To’ Strategy
The ‘subject to’ strategy involves the transfer of legal title from the homeowner to the investor without the investor having to pay back the original mortgage that the homeowners had.
9. Friends and Family
If you have wealthy family members, then this might be an option worth considering especially as they will be easier to convince them than private money lenders.
10. Buy as an owner occupant
One of the best ways to buy a property without having to invest in it is to buy it as an owner occupant, which means you get to live in the house as the owner for a year or two and then sell or rent it out.
11. Save money and use it to invest later
This is an old fashioned way where you save up money and then use your savings to invest in the market.
12. Turnkey Providers
This option is one where the properties usually require no renovation and can be rented out in its current state and are usually offered to investors as much as 5 percent down. Even though this option is good, the providers usually have high interest rates and so it is vital that in order not to fall behind, occupancy rates are maintained all the time.
13. Line of Credit
In this option, you get to withdraw credit as funding because you do not have any cash. Even though this option is similar to that of a credit card, the interest rates are lower and the limits are higher. However, in order to be able to establish a line of credit, you would require a quality credit score.
14. Refinancing the Mortgage
In this option, you get to replace the current mortgage with a new one. In doing this, you can determine what rate the mortgage should be, how long the loan will be for and how much the loan will be. However, this option should be taken with caution so that you do not end up having two mortgages.
15. Combination of the above options
There is no rule that states that you cannot combine any of the above methods as an investor, all it would take is for you to be creative and have a clear knowledge of how the real estate industry works.
16. Make use of credit cards
This is another option that allows you the option of getting quick funds with which to buy a property; however, you must ensure that you quickly sell the property in order to pay back so that you aren’t bogged down with high interest rates.
17. Withdraw from your IRA
Withdrawing from your Independent Retirement Account could incur certain penalties especially if you aren’t around 60 years; however there are exceptions that first time real estate investors could use to their advantage. Ensure however that you discuss with your financial advisor before using this route.
18. Use your current assets
The fact that you have no money to buy a property doesn’t mean that you cannot use your current assets, which can help you get lines of credit in order to be able to purchase the property you need.
19. Secure loan from bank
If you are a first time investor, this option might not work but it is worth giving it a shot. Ensure that you have a well written business plan as well as good credit so as to increase the consideration chances with your bank.
20. Create a real estate investment club
You can create a real estate investment club in your neighborhood if there isn’t one. Place adverts in vital places in order to get investors of like minds.
One thing you should know when looking to invest in the real estate industry with no money is that your credit score is very important and it is therefore vital that you take steps to know and understand it especially as a quality score will be to your ultimate benefit and success as an investor.