How to Become a Real Estate Investor with No Money [Infographic]

by | Aug 18, 2018

Want to know the real estate strategies that require no money down investments?

Do you want to know how to become a real estate investor with little to no money?

In this article, you’ll discover how to become a real estate investor with no money or little money.

I’m happy to know that when the great majority of people who think of real estate investing they think actual “investments.” That is, you need money to start. But the truth is there is real estate investing strategies that require little to no money down.

When I first got into real estate investing I was blown away at learning the concepts and strategies that are used in real estate investing. Just to think that I did not need money to start investing in real estate was completely mind-boggling. To this day, I can’t think of an “investment” that requires no money.

Real Estate Investing Mindset

Before I go into the real estate strategies that are used to invest in real estate with no money down. I want to encourage the reader that if you are just starting out or even if you have started. You need to understand the importance of having an investor’s mindset.

I believe we are living in a day in age in which just about all information that we could ever want is out there. And that includes how to become wealthy. There are hundreds, if not thousands of books on real estate investing and other countless books on investing, earning more money, becoming a millionaire, etc. But the sad reality most do not ever take the initial step. They don’t start.

One of the key principles is that of passion. If you don’t have a passion for what you are pursuing. You will probably fail. You need to enjoy doing it even if you weren’t making money. This goes along with just about anything. I’m not saying you need to worship the pursuit but having a solid healthy passion in your goal or mission.

Real Estate Investing Education

There are multiple real estates investing gurus out there and as I mentioned before hundreds, if not thousands of books on real estate investing. YouTube can also be a great resource to start getting an education. If you want something more formal that is structured and based-on college-level curriculum, then click here to learn more. Otherwise, if you put in the work and research you should be able to get educated to start doing deals in real estate investing.

Become a Real Estate Investor with No Money

There are three strategies that I will give you to lay down the foundation and the key concepts that require little to no money down. They are real estate wholesaling, lease options, and seller finance.

Strategy #1 – Real Estate Wholesaling

Real estate wholesaling is an investing strategy that does not require money down. In short, the wholesale investor contracts with a seller and then reassign the contract to a buyer, usually another investor. You basically set yourself up as the middleman. These deals can bring in from a few thousand to ten to fifteen thousand each deal.

As I mentioned before, there is a significant amount of education that is required but, in this article, I simply want to give you the foundation, or the path to take if you are interested in real estate investing with little to no money.

How does a Real Estate Wholesale Deal Work

Real estate wholesaling starts out by simply finding a property, usually distressed, but not always. Once the property is located the next step is to find the owner. A public search may be required because these properties that you are searching for usually will be vacant (tall grass, boarded windows, etc.). Once you get in contact with the owner you negotiate a price that he/she is willing to take. To get this price there are several key numbers that you need, to properly and accurate estimate the deal. You need to determine the ARV, the rehab cost, holding cost, closing cost, buyer’s profit, and your own profit.

Once, these numbers are estimated you can use the 70% rule to estimate if the deal is workable or not. If it is, you will offer and negotiate the price with the seller. If the seller accepts, a purchase agreement is needed to be signed by both parties.

Your next step is to find a cash buyer, and this is usually another investor who is in the market to make the repairs and then retail the property at ARV. Once you find the buyer, negotiate the price and close on the deal at a title/escrow company.

Your profit comes in at the difference between what you pay to the seller and what the buyer pays. This can also be called an assignment fee.

Real Estate Wholesaling

Strategy #2 – Real Estate Lease Options

Real estate lease options involve leasing a home to someone who has a legal agreement to purchase the home within a certain time frame, usually 2-3 years. This strategy can be also known as rent-to-own homes.

How does a Lease Option Work

The strategy is quite creative and depends on the situation at hand.

Although there are multiple ways to use this strategy. One way is when an investor contacts a motivated seller. This seller is usually in distress, facing foreclosure, or upside down on their mortgage. However, the investor sometimes can offer a fair price on the home if the terms are good. It is either in the price or in terms of where the investor earns his/her money. And the investor lets the homeowner choose, but the homeowner cannot have both.

Let’s say that a homeowner is motivated and needs to sell but can’t. A lease option will allow the owner to sell “in time” over the course of three years. In other words, you as an investor lease option a home from the seller and agree on a price on the home and work out terms (down payment, monthly payments, etc.). Once you have the lease agreement signed an option signed you now can lease option the property to a potential buyer.

The investor earns money based on the difference between what he/she will pay for the house and what they sell and the difference on the monthly payments.

Strategy #3 –  Real Estate Seller Finance

This strategy is easier to understand than the others, however, you may need a little money for the down payment. Although, it is possible to negotiate a no money down seller finance deal. It may be difficult because the seller, of course, wants what is best in their own interest.

How does a Seller Finance Work

Seller finance is where the seller becomes the bank. Although, legal ownership changes the payment is sent to the seller. Seller finance requires that the seller owns the property outright and has no mortgage themselves.

For an investor, this strategy can become very beneficial because they don’t need to request money from the bank. Furthermore, this strategy can be done with those who have bad credit and no money.

If you negotiate with a seller and you meet the terms or price they may be willing to accept what you are offering. For example; they may not require a down payment if you increase the sale price, offer more on the monthly payment or have a higher interest rate.

Sellers who own their home outright may find it beneficial for them to be paid monthly than have a large sum of money from a sale. After all, they potentially could get more out of the deal when the become the bank and are now charging interest to the buyer. So, your negotiation skills come handy when trying to work out a seller finance deal.

Conclusion

Contrary to the belief. YOU DON’T NEED MONEY to invest in real estate. Even if you have bad or no credit. If you master these three strategies, you can also start investing in real estate. Although, it is easier to have some money for negotiation and to appease the seller it is not required. You will simply need to know what you are doing

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Real Estate How to Become a Real Estate Investor with No Money [Infographic]