For many, real estate investment is a dream come true. Buying an investment property with little money down is the ultimate goal for most investors because the bigger the down payment, the lower your payment and interest rates. But what can you do if you are a cash-strapped investor?
Here are some ways you can get started right now!
- A Primary Rental Residence
- Leveraging Another Property
- Seller Financing
- Partner Investments
A Primary Rental Residence
You may or may not have heard of the process of House Hacking. In a nutshell, it’s where you buy a multi-unit property you live in as your primary residence while renting out the rest of the units. This is a popular method for young and new real estate investors to start investing in commercial Real Estate, usually with little to no money. Payment assistance programs like FHA and 203k loan will get you started on the right foot with your new investment.
Leveraging Another Property
If you have an excellent credit score and own your home, you can make use of the equity (the property’s equity is the home’s value minus any outstanding mortgages). This type of financing allows up to 75 to 80% of a property’s equity. For example, if you owe $100,000 on a $200,000 home, you can use up to $75 to $80k for purchasing another property.
If you want to buy a house but don’t have the cash to pay right away, you might consider getting the seller to finance your purchase. This arrangement is called owner financing, and it comes in several different forms. Depending on how you set up the deal, seller financing can make it much easier for buyers to come up with enough capital. It also guarantees that sellers will get an inevitable return on their investment.
If you are interested in real estate investing but can not afford the down payment or wish to coax your family or friends into investing with you, then you will want to explore partner investments. This is one of the most common methods of buying an investment property with little to no money down.
This is done using other people’s money. You will need to find a private lender or funding partner willing to partner with you on the investment. This partner will provide you with the finance to buy the property. This could be just the down payment or the entire property price in exchange for a return on their investment.
From this little list, you might be able to tell how simple it is to buy an investment property with a little money. All you need to start your career in real estate investing is a few pointers and tips on how to go about it. As long as you are willing to work and ready to put some elbow grease into the deal, the rest will be taken care of.