How to Buy Real Estate with No Money Down
Want to buy real estate without using your own money? I’ll share investing strategies that can allow you to do this.
But it will take lots of hard work on your part.
DON’T BECOME PREY to all the “gurus” out there running Facebook Ads about how to buy real estate with no money down.
Most of them are advertising a get rich quick scheme to hype you up without actually teaching anything valuable and actionable.
One strategy they often preach is “wholesaling” and how quickly you can go from $0 t0 $10,000 per month by following their “proven system”, which isn’t true at all.
We do cover the wholesaling strategy in these articles:
- Beginner’s Guide to Wholesaling Real Estate
- How to Build a Buyer’s List
- Example Wholesale Deal Timeline
But the difference is, it takes hard work to build a wholesaling buyers list and it still takes all the same work to find a property to get under contract with a seller as a wholesale deal just as it does for a flip or rental property.
Wholesaling is one of the no money down strategies but you’re more likely to build sustainable success, long term, by focusing on rental properties which can be acquired using a variety of financing strategies that require little capital of your own.
Here’s the truth to save you time reading and watching my video lesson below:
- Ask your parents for a loan and go buy the investment property all cash
- Ask your rich uncle for a loan and go buy real estate with his cash
- Take the $5,000 you have saved, and ask your parents to sign for the mortgage loan with a bank you can’t qualify for on your own
- Become 50/50 partners with someone who can buy the property, while you do all the work
- Get a property under contract with a seller and ask them to finance the loan for you instead of bank
- Do a rent-to-own deal, but then sublease the property at a higher rent and collect the difference
- Take over an existing property’s mortgage if the seller is falling behind on payments
These are just 7 creative ways you can get into a real estate investment deal without having to put thousands of dollars of your own capital into the deal.
Learn more in this real estate investing course I’ve put together (hundreds of students have loved it)
And check out my free tips in this YouTube video as well as other videos on my channel.
Ask Your Parents for the Money
If you’re trying to buy real estate but don’t have much money, you’re likely chance of getting it will be from close friends and family. Start with your parents.
As a 20 year old in college at an expensive university, I had no choice but to buy my first deal with the assistance of my parents.
If you’re 45 years old, it may be a different story trying to ask your parents to dip into their retirement savings for a real estate deal you want to buy.
But if you make a compelling case of how the property will make you money and they’ll earn a return on their money, they’re likely to say yes still and help you out, even though you may be embarrassed asking.
Ask Your Rich Uncle to Loan You Money
If your parents don’t love you (just kidding), then go to your rich uncle. Ask him to cut back on exchanging for a new car every year and instead give you a loan to buy an appreciating asset like real estate.
Hopefully you’ve got a cool uncle who will help you turn little or no money down into a nice profit by funding your investment deal. Make sure to offer a nice interest rate or part of the equity in the deal.
Get Help Qualifying for a Loan
A big set back for many beginner real estate investors is they can’t qualify for a real estate loan.
Or they can’t qualify for a loan that is big enough to buy the apartment building they want to go after as their first investment deal ever (yikes).
So what you do is you ask around for help getting a loan. Start with your parents and see if they’ll be on the loan with you, using their credit and income history to help the deal go through.
Or find that rich uncle who has great credit and enough money to qualify for any loan you want to go after. In this case, yes go after that multi million dollar apartment building.
50/50 Investment Partnership
Don’t have money? Find a partner who can buy the deal for you and let you operate it as “sweat equity”
In other words, your value is all the work and his/her value is the financing. Map out a list of all the tasks you’ll be doing to support your case for gaining 50/50 share.
- Finding the deals & analyzing them
- Driving the neighborhoods to vet the deals
- Contacting contractors to get quotes
- Communicating with the realtor
- Managing the rehab
- Managing the tenants
- Collecting rents
One of the best no money down or very little money down strategies is using the seller as the bank. When searching for deals online, read the property description boxes.
You may see the realtor use words like:
- Owner financing
- Seller financing
- Owner willing to carry
This indicates a motivated seller who will help get a deal done by being the bank and loaning you the purchase price.
In return, you make monthly payments to them until their loan terms come due. Then you may have to refinance and get a bank loan to pay off the seller financing loan.
Rent to Own / Sublease Strategy
Another way of buying real estate without much money down is the rent to own strategy. You agree upon a purchase price today but don’t actually buy the property for a year or two.
Instead, you make monthly rent payments to the seller while saving up for the next 12-24 months to afford the purchase when your lease option comes due.
In the mean time, you can sublease the property to a tenant for a higher rent price than what you’re leasing from the owner for and net a profit.
It’s a difficult strategy and involves legal verbage in your contracts to allow it, but can be a profitable way of earning money without owning the real estate yet.
Seller Loan Takeovers / Assumption
If you find a seller who is getting behind on their payments, you may be able to help each other out.
On the seller’s side of things, they could lose the house to the bank in foreclosure if they don’t catch up on payments. This is where you step in and offer to buy the property from the seller.
You take over or “assume” their loan, making the payments to the bank for them as well as catching up any payments they were behind.
Again, it’s a tricky strategy you’ll need to research further because the banks have clauses in their loans that force the loan due in full if the seller sells the property.
Make sure you determine the legal way of taking over the seller’s loan so that the bank doesn’t call the loan due and ruin the deal for you and the seller.
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Complete those 3 action items and you’re going to be on the right track to becoming successful as an investor. You’ll learn many different personal finance topics and resources that will be instrumental to helping you quit your job earlier in life than you imagined.
How to Buy Your First Investment Property
If today’s blog post and video lesson inspired you to get into real estate investing but you don’t know where to start, check out my brand new course: Real Estate Investing Beginner’s Course to Buying Your First Deal
You’ll learn all the basics plus more advanced topics:
- Why real estate investing is better than the stock market
- How to find deals with large profits in your city
- How to fund your deals if you have little or no money
- How to buy deals with bad credit
- How to analyze deals and know which one’s are worth offering on
- Setting up legal entities like an LLC
- The due diligence phase prior to closing on the property
- 4 ways you build wealth through real estate investing
- And much much much more!
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