Real estate has an excellent track record as a long-term investment. However, it doesn’t come without barriers, and the main one comes down to one thing: cold hard cash.
You need money to make money – or so the saying goes. It is particularly true when it comes to diving into realty investments. After all, as any homeowner knows, you need a significant amount of liquidity to purchase a single property, let alone several. For most people, their home is the biggest purchase they will make in their life.
Thankfully, there are many ways you can invest in real estate. Besides, some of them do not involve having to let go of your hard-earned cash. Here are some of the options you can explore if you do not have access to unlimited amounts of liquidity to make your first investment.
Apply for a loan that doesn’t require a down payment
If you can live in the property for a time, you may have access to government-backed loans that do not require a small or no down payment. Some of the most common ones include FHA loans, VA loans, or USDA loans. The property you are planning to purchase will need to satisfy some requirements as far as condition or location is concerned. They apply for single-family homes or small multifamily buildings with two to four units.
Use the equity from another property
You may already own a property (like your primary residence, for example) and have significant equity in the building. In that case, you can contract a home equity loan. It will then gives you access to this sum without having to sell your building. You can then use that money to purchase an investment property.
If you can negotiate with the seller, you may be able to obtain a “lease option” as you rent the property in the long term. You will need to get a legal “option to buy” from the homeowner according to which you agree to purchase the property at a later date for a previously set amount.
Find a private lender
Instead of contracting a loan from a bank or a credit union, investigate non-traditional options for a microloan. They can be issued by individuals (the owner of the property you are interested in purchasing, for example). You can also involve several investors (friends and family members, for example), each covering a portion of your lending needs.
Take part in a real estate partnership
You may not have enough to purchase a real estate investment alone, but what about joining other investors in a similar situation? Not all partnerships involve a financial contribution. You could also become a partner thanks to your skills, real estate knowledge, excellent credit score, and so on.
Find a motivated seller
Motivated sellers are more likely to agree to a non-traditional financing approach. By using a service like Need To Skip, you can get the contact information of homeowners who may be interested in selling their property at a discounted rate or for no money down.
Real estate wholesaling
In real estate, wholesaling consists of finding an interested buyer for a property under contract. You then sell it for a higher price before actually closing. Since no closing costs, down payment, etc. are involved, you can get away with investing with little to no money of your own.