Most people fear venturing into real estate investing thinking they need a lot of money to start. Others fear the “No money down” scams out there.
Can you really invest in real estate with little or no money? Let us explore this topic in this article.
The traditional method of buying real estate is having cash, or getting a loan which also involves putting a sizable amount as down payment. This can get expensive and unsustainable if you are a real estate investor looking to buy many properties.
Let us explore alternative methods of buying real estate with little to no money:
1) Wholesale real estate investing
Flipping real estate involves looking for a highly discounted property, then putting it under a contract. You then turn around and get a real estate investor to buy it at a wholesale price.
You can either assign the contract to the buyer, or you can do a simultaneous closing where you buy the property, then sell it on the same table.
If you do a contract assignment, then the only money you need is earnest money when you put the property under contract. Typically this is between $100 to $500. The real estate investor buyer must produce earnest money to get into the deal, meaning you do have spent no money.
If you do a simultaneous closing, a few scenarios can happen. You might be able to use your buyers cash to close the first transaction when you buy the property. The same cash is used to close the 2nd transaction. You walk away with the difference.
In this transaction you spend no money.
In a simultaneous closing, you might need transactional funding to close the transaction where you buy the property. Typically hard money lenders will not need any money from you to fund such a transaction.
Again, you spend no money of your own.
2) Seller financing
Sometimes, you may negotiate with the owner so they accept monthly payments instead of all cash for the purchase.
You might have to produce some down payment to make this happen.
You then turn around and look for a buyer who will also be making monthly payments, typically higher than you make. Of course, they will have to produce more money down than you have paid, meaning you end up spending no money of your own.
Such deals are owner financing, lease options, rent to own, etc.
In this case you will need the down payment to make the deal happen.
3) Partnership
You can have a partner who puts up the cash you need for your real estate transactions. Of course you spend no money of your own, but you have to share the profits as agreed.
4) Financing
You can use a home equity line of credit or similar credit to finance your real estate investing transactions. You will pay interest, but again you spend no money of your own.
Successful real estate investing not only demands buying houses efficiently, but also selling them quickly. Learn how you can quickly sell your houses even in a poor market using a real estate investor website for selling houses.
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