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How To Buy Investing Properties For No Money Down
By: Simon Macharia |
| word count: 450 comments(0) views: 67 |
| 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. |
Lots of people never venture into real estate investing because they fear they need a lot of money to invest in real estate. With so many "No money down" scams out there, others are scared of getting scammed.S
Can you really invest in real estate with little or no money? This article dissects this topic.
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 be too expensive especially if you are looking to do many deals.
Let us explore alternative methods of buying real estate with little to no money:
1) Wholesale real estate investing
Wholesale real estate involves locating a cheap property then putting it under 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. This is usually $100-$500.
Your real estate investor buyer must produce earnest money, meaning you come out with no money of your own.
If you do a simultaneous closing, a few scenarios can happen. You can use your buyer's cash to close the first transaction when you buy the property. The second transaction is closed with the same cash. Your profit is the difference.
In this transaction you spend no money.
In a double closing, you might need transactional cash to close the first transaction. You can get it from hard money lenders, usually spending no money of your own.
Again, no money of your own is spent.
2) Seller financing
Sometimes a seller can accept monthly payments instead of all cash for their property.
You might have to produce some down payment to make this happen.
Then you get a buyer who makes monthly payments, usually higher than you make. They have to pay money down, usually higher than yours - you end up spending no money.
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. You spend no money of your own, but share profits.
4) Financing
An equity line of credit, such as home equity, can finance your real estate transactions.
You will pay interest, but again you spend no money of your own. |
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