- Use Hard Money– hard money lenders are private individuals who loan on property based primarily on the value of the property. Although lenders have been tightening their standards in recent years, they still will generally lend 100% of the purchase price and possibly even repairs if the deal is good enough. If the lender feels secure enough in the investment, you may not need to put any money down initially, just be conservative when estimating future value.
- Partner Up –If you have all of the skills and information for purchasing investment real estate, but aren’t as financially capable as a potential investment partner, working with someone else could be an excellent option. Many are interested in investing in real estate but avoid doing so because they lack know-how. If you have the know-how, but no money- this option could be best for you. Be sure your terms and conditions are spelled out before beginning a partnership.
- Use a Lease-Option – A lease-option is a strategy used in real estate to buy homes from homeowners without actually taking legal ownership. Instead, the real estate investor signs a long-term lease with the house owners as well as signing a legal “option” to buy the property at a specific price in the future. The owners are not legally allowed to sell the property until the option period is up, and the investor gets to lock in his purchase price as well. The investor can then easily rent the property out for cashflow or find a buyer to sell his “option” to.
- Use your Home Equity – Using the equity you already have in your home can be a line of credit, essentially, that you can use to purchase a new real estate investment. Generally, home equity loans have low interest rates- which makes the money “cheaper” to borrow than alternative routes.
- Use a Combination – Finally, you can mix and match using any of the above scenarios. Creative financing is used by many to build their investment portfolios, just be sure that all of your investment combinations correlate smoothly. Keep communication between your investors, partners, or property owners open when balancing several financing options.
There are many options available for purchasing properties with little to now cash flow. Starting Point real estate has listed just a few, but we’re happy to answer any and all investment questions that you have. If you’re looking to build your portfolio, and gain financial freedom, real estate makes an excellent investment option.