Many of us assume that investing in real estate is not possible without money. Though having cash in the form of down payment is a quick way to enter the market, it is not the only option. Some people have succeeded in investing in real estate without any personal funds. If you lack personal finances but are interested in real estate, you should look for options to achieve this. The following strategies can help.
Consider seller financing
A seller who is determined to let go of the property may let you acquire it without a down payment. Make an offer such as paying higher payments every month in place of the down payment. A motivated seller can even give you a loan so that they sell the property fast. For such a deal to work, ensure your real estate attorney prepares an agreement that protects the rights of each concerned parties.
Borrow the funds
You can also borrow money from different lenders. Get a lender that offer low-interest rates or seek assistance from a real estate broker. Alternatively, you can ask a family member or friend from some assistance. Sign an official promissory note with the due dates and interest rates indicated.
A bank can also give you a home equity loan to use as down payment on top of the existing mortgage loan. In this case, you can use your home as collateral. Ensure you apply for a loan that you can afford to pay back on time to avoid losing your home.
Get a partner
Try to find another cash buyer and partner with them. Your partner can provide the necessary funding as you handle the management. For this to work, you need a contract that states the responsibilities of each party and how to divide the profits. If your partner offers financial support, you should oversee the day to day management of the investment.
Rent the real estate property with the option to purchase
You can also rent out the property from the seller with the option to purchase it. You can negotiate with the seller the amount you should pay at regular intervals during the duration of renting the property. Such an agreement allows you to buy the property at a certain price during the lease term. Most of the rental payments are credited towards the buying price.
Consider barter trade
It is possible to pay for a real estate investment by bartering a specialized skill you have or possessions. For instance, if you are a contractor looking to invest in real estate, you can offer free labour in exchange for the down payment.
If you don’t have specialized skills in the field but possess valuable items such as a boat, car or motor home, you can swap them for the down payment. An attorney should also be present during the deal to draw a legal agreement. The value of each item should be clearly stated. You may also need an outside appraisal to close the deal.