By investing in real estate, you can generate consistent passive income. For example, renting out a purchased property can guarantee a monthly rental income. This way, you can achieve the desired financial freedom that you seek. Now, for that to happen, you first need the necessary financial resources to invest in a property. Isn’t it? Making money from real estate requires large sums of money to be invested. That’s a fact!
Hold on!
Having said that, there are ways to get into investing in real estate with no money or little money. This article is about real estate investing for beginners who are cash-strapped or have little money. If you’re one of them, here are the best real estate investment strategies. But before going there, for such investments, you require some kind of support. Having an experienced real estate investment mentor will be very helpful. Check out Laura Alamery, an expert real estate investment mentor who can make your investment journey painless and fruitful.
Let’s dive in!
Six Best Ways to Invest in Real Estate with No Money or Little Money
Seller Financing
Have you ever heard of a property owner becoming a bank to finance a buyer to invest in a property? If you haven’t, this is seller financing for you. It is the best way to invest money in real estate.
Seller financing is a legal agreement between the owner of the property and the buyer (you). In this type of financing, the buyer, instead of approaching a financial institution for a loan, takes a loan from the seller. The buyer then pays monthly installments with some percentage of interest and purchases the property over a period.
This is one of the best ways to purchase a property where traditional lending requirements are not involved. You just need to fulfill the requirements set between you and the seller.
Hard Money Lending
If you want to avoid the long loan approval process for securing a property loan, hard money lenders are the ones you must approach. These lenders are not your typical traditional lenders. They are individuals or private companies that lend money for investment, and in return, you need to put any of your assets as collateral.
Having said that, hard money lending can be expensive. Since the lenders are taking big risks, they charge high-interest rates on loans. Additionally, you have to bear the cost of application fees, appraisal fees, and other fees that incur when investing in a property.
Purchasing shares through REIT (Real Estate Investment Trust)
A real estate investment trust is another great way to begin your real estate investment journey. It is a company that holds ownership or finances income-producing properties. What’s unique about REIT is that you don’t need to purchase physical property; you can simply invest in a portfolio of real estate, just like investing in stocks. After the investment, you earn a share of income from it.
Developing a partnership to fund real estate
Forming partnerships is a common way of financing real estate investments. If you are cash-strapped, one of the best ways to invest in a property is by bringing in partners to fund the investment.
When in a partnership, you can divide your responsibilities. You can look for the best-discounted property deals, and your partner can use their credit scores and capital to finance the investment. This way, everybody is contributing to the partnership.
Home Equity Loan
If you already have a property and are looking to invest in a second property but have no money to invest, you can opt for the home equity loan. It is a type of loan where you need to put the equity that you have built in your primary home as collateral to borrow money. This money can be directed towards investment in the new property. Many financial institutions like banks and other institutions offer loans such as the Home Equity Line Of Credit (HELOC), which buyers can use to invest in their new property.
Live for some time and then rent it technique
In this investment technique, you are required to purchase a modest home or buy rental property (a home that can be rentable). Then, live there for some time, vacate the place, and finally rent the property. Owning a few such properties sets you up with a portfolio of rental properties that can generate steady income in the future.
To make this work, you need to first buy a modest home. For that, you can purchase a home with zero cash down by using small down payment loans like VA or USDA.
In conclusion
Real estate investing is the practice of owning, renting, or managing any type of property for monetary gains. Generally, real estate investment involves a large sum of money, but there are investment strategies involving no money or little money, which this article touches upon. Review these strategies, apply the best ones that you think can work for you, and make your real estate investment profitable. Of course, there’s nothing like having a trusted real estate coach guide you through your real estate journey. Laura Alamery can be that coach.
