3 Tips To Purchasing Real Estate With Little Or NO Money

There are many reasons why I like to invest in real estate. But one of the best things about investing in real estate is the ability to leverage your investment.

The ability to leverage real estate and control assets for a fraction of the price is a HUGE advantage that I would highly recommend every investor implement in order to maximize return and grow your portfolio.

With real estate, you can buy an asset and leverage it by paying a bank a 20% down payment. For example, if an investor wants to buy a $100,000 duplex, bank financing will allow him to buy the asset with a $20,000 down payment.

But what if you would like to invest in real estate with little or none of your own money? What if an investor does not have extra money available to invest? How do you continue to grow your portfolio? Is it possible?

Absolutely! Here are three tips you can use to acquire more real estate with little or NO money of your own!

1. Buying “Subject To”

This is a strategy that is popular in the U.S….but it can also be done here in Canada as well. The challenge is finding a lawyer that is familiar with this process. Most lawyers are not aware of how to properly structure this type of deal. Buying properties “subject to” means that the buyer makes the acquisition without paying off the existing mortgage on the property.

The ownership of the property changes to the new owner, but the debt does not get formally assumed and does not get paid off at closing. The mortgage remains in the name of the person who originally took the loan when the house was purchased.

This strategy can provide opportunities to buy properties with no money down and without the investor needing to get a new mortgage. These opportunities are available from motivated sellers that need to sell because they need debt relief due to many factors such as death, loss of job, bad money management, divorce, illness etc.

2. Lease Options or rent to own

This is another method used to gain control without ownership. Lease options and rent to own is the essence of tying up houses on a long term contract. You can think of this investing option as seller financing with a twist.

The real estate investor gains a long-term lease….at least three to five years in length, if not more. The lease also contains an option to buy the property at today’s negotiated price. An option provides the investor the legal right to buy but there is no legal obligation to buy the property. As part of the lease agreement, the investor gains the right to sub-lease the property to other tenants. It is combining renting with an option of purchasing.

The investor has control of a real estate asset with little or no money out of pocket. With this control, he/she can rent the house for the agreed upon term and enjoy the cash flow. He also has the right, but not obligation, to actually buy the property at any time in the negotiated option period.

3. Private Lenders & joint venture partners

Who needs the bank? Take back control! You have many options to succeed in real estate! If you do not need to go to the bank, you will not need to put down a huge down payment. Instead you can use O.P.M….. other people’s money. Find a private lender or a joint venture partner to put up the money for your real estate deal and pay them a great return. This is a great win win strategy and one that I have personally used to buy millions of dollars worth of cash flow real estate with none of my own money or credit.

With joint ventures, typically the real estate investor does all the work but provides none of the money for the deal. Both parties in the joint venture agree to share the rental income and future profits. The equity can be split 25/75, 50/50, 60/40 or however you work out the terms with your J.V. partner.

There is no better time to start investing in real estate. There’s a lot of distressed inventory available at great prices and good strong rental demand. Do not let the balance in your bank account hold you back from achieving your goals of becoming a successful real estate investor. You can still invest in real estate with very little or even no money. Structure deals directly with sellers, use private lenders, and be flexible in your negotiations. With some education and guidance you will be ready to capitalize on this amazing opportunity.

F.Y.I………this is just a few of many great strategies available!

Do you want to learn more about these strategies? comment below