In the past decade, real estate investing has become a much more viable option for investors, especially when it comes to flipping properties and rental portfolios. The main barrier to entry when it comes to all types of real estate investing is simply the immense cost needed to start investing. Many investors have started with as little as $50,000. But realistically, depending on where you’ve decided to invest, most people in today’s market will need about $100,000.
But what if I told you there are ways in which you can start investing with no money? Here is how.
Borrowing Money to Make Money
The main hurdle to conquer when buying an investment property for people with little or no money is the down payment. This can be 20% to 35% of the total cost of a property. For most people, saving that amount of capital can take years, so investors looked at other financing solutions. The easiest and most common way of purchasing real estate without any capital is by borrowing the down payment needed to buy a house, along with all of the costs associated with it.
Many real estate lenders specialize in lending investors enough capital to buy a property, rehab the property, and then either sell it or rent it. Many of these lenders have their own way of lending with varying rates, line of credit or home equity. It is best to find and consult with a real estate lender that specializes in the area that you are invested in investing in.
Why would someone lend you 100% plus the cost to fix it? It’s simple. You’ll need to become an expert in finding properties below market value. This is done by locating “motivated sellers” who NEED to sell their properties because of various reasons, including, loss of job, divorce, market downturn, tenant issues, property needs major repairs etc.
Getting the Seller to Finance your Project
Another common way of investing in real estate with no money down is through seller financing. If an investor does not have the capital needed to purchase a property, they can have the seller finance the amount. But how does it work? Instead of borrowing the capital from a lender or bank, the seller of the property extends the financing to the buyer, essentially becoming the lender in the process.
The property will have a new owner and the buyer will then pay the mortgage to the seller with the pre-agreed upon rates and contingencies. Once the seller rehabs the property and sells it, they are then able to pay the remaining balance with the seller and keep the rest as profit.
Leasing Your Way Into Financial Prosperity
When using a lease option to purchase a property, the buyer of a property pays the seller a monthly premium, which acts as mortgage payments or is higher than typical rental prices. The difference between the market rent and the premium charged by the seller will then go towards the balance of purchasing the property. The higher the monthly rent, the faster an investor is then able to own the home.
Bringing Value to The Big Boys (Or Big Girls) Table
Many real estate professionals are able to find properties that are near foreclosure or are being sold at a discount for various reasons. Despite not having the capital themselves, they are able to refer the sellers of such properties to investors with significant capital.
When a real estate broker or an investor is able to find high-value properties for real estate investors, there is a chance of them becoming an equity partner in the business deal without having to have any money down. The reason this happens is that the real estate broker is able to bring significant value to the deal by finding and offering it to the investor.
The underlying aspect of all business deals is the real estate broker or investor is an equity partner in the deal without having to invest his own capital. The investor becomes the money partner who essentially does not need to do the work.
Leveraging your assets
Many investors might find themselves in a situation where they are cash poor but asset rich. In this situation, taking out a home equity loan would be the perfect solution to starting a career in real estate investing without needing to save capital for years. Many investors have started with home equity loans on their own homes to get started. There are many different benefits to using home equity loans, such as the capital it provides, the lack of bank approval on properties, and the flexibility it offers investors.
Contrary to popular belief, you do not need to have saved 10’s or 100’s thousands of dollars to become a real estate investor. Many individuals are able to earn the benefits of real estate investing without having the capital needed. Investing in real estate has never been more popular than it is now. It has a unique blend of cash flow, asset growth, and stability. Although purchasing a property is quite easy, we do advise all real estate investors to use caution when investing and to fully do their due diligence on all of the properties they are looking to invest in, which also applies to all investments.
About Sunil Tulsiani:
Sunil Tulsiani, an honoured personality of Canada, is a former police detective of the Ontario Provincial Police (OPP) turned real estate investor. After 15 years in the force, he walked away because he found himself spending too much time at work and not enough time with his family. Sunil turned to real estate investing, buying and selling 77 properties in his first year alone. This left him known as “the wealthy cop,” this beloved nickname has stuck around to this day.
Today, Sunil is a multi-millionaire investor who aims to help others attain financial freedom through his membership and mentorship programs. Members of the club include Jack Canfield of chicken soup for the soul, Robert G. Allen New York Times best-selling author, Brian Tracy and Kevin from Shark Tank!
Sunil not only spearheads PIC but is an international speaker, best-selling author, business coach, mentor, public speaker and an expert real estate investor. He has shared stages with the likes of Tony Robbins, Robin Sharma, Robert Kiyosaki, Grant Cardone, and Les Brown amongst others. He has been featured on Forbes, USA Today, The Toronto Star, CNBC, Times of India, and Fox Business News and has been profiled on Breakfast Television (CP24). Sunil’s goal is to make 100 millionaires / multi-millionaires through his elite club and mentoring.