How To Invest in Real Estate With Little to No Capital
The perks of becoming a real estate investor are one of the main reasons so many are choosing to take advantage of the opportunity. From being your own boss and creating your own schedule to having consistent cash flow without needing to clock in 40 hours a week, being a real estate investor undoubtedly has its benefits. But how do you become a real estate investor if you don’t have a significant amount of money saved? The good news is, it’s still possible. Here are a few options to consider if you want to invest in real estate with little to no money down.
1. Invest in a Turnkey Property
The beauty of turnkey properties is they don’t require repairs or renovations on the front end, so once the transaction is complete, you can begin looking for renters immediately. Depending on the type of loan you qualify for, you may need to be prepared for a minimum down payment. If you have friends or family who are willing to offer a gift payment, this can be applied towards your loan.
READ MORE: Financing a Turnkey Investment Property: 3 Rules to Follow
Some sellers are also willing to pay closing costs if full listing price is met, so while you may have a higher mortgage payment, you can essentially purchase a rental property without a large deposit upfront. If you’re investing in a real estate property in a low income area or in a neighborhood popular with first-time homebuyers, it’s quite common for sellers to play closing costs in these scenarios. The downside - sellers want to ensure they’re also getting a return on their investment, so they may ask for a higher offer in exchange for any negotiables requiring an investment on their part. If you’re considering paying asking price in order to request sellers pay closing costs or make repairs as needed, just be sure your mortgage payment allows room for positive cash flow.
2. Invest in a Home / Rental Property
Another insider tip many rental investors use is to purchase a home for the purposes of residing there for at least once year and then renting the property out. Residing in the home for a minimum of one year allows an investor to purchase the home as a homeowner rather than an investor. If you are working on building your credit score and investment portfolio, investing in a home as a primary resident also allows you to qualify for more loans with a lower credit score. This means lower interest rates, lower down payments, lower monthly mortgage payments, less taxes in the first year of owning the property, and more money in your pocket in the long run.
READ MORE: Ready to invest? Learn more about how rental property investing works.
3. Invest in a Duplex or Multi-Unit Dwelling
One way to decrease expenses in real estate investment transactions is to invest in a multi-unit dwelling that offers multiple rental opportunities. While the cost of a multi-unit dwelling is typically higher than that of a single-family dwelling, it’s typically much more cost effective than purchases four individual single-family dwellings. Some investors may even choose to purchase a duplex and reside in one unit while renting out the other.
READ MORE: Investing in Your First Turnkey Rental Property
4. Work with an Experienced Investment Company
If you’re new to real estate investing, working with an investment management company or consultant can help you save time and money in the long run. An expert can guide you through the legal and financial know-how of real estate investments, so you can spend less and make more. Want to work with an expert who can show you the ropes? Contact a member of our investment management company? We’re happy to explain how real estate investment works and help you find the right location, property, and management plan for you.