Can I buy an investment property with no money? I get asked this question by beginner investors who want to buy properties but lack some or all of the start up capital required for the down payment and closing costs. Sometimes they are so eager to get started because they have watched late night infomercials and television shows that promise wealth without any money and experience. While it is possible to purchase property with no money, people with limited experience and money should focus on other ways to enter the world of real estate investing.
Joint Venture with Family
So, you have no money and you lack real estate investing experience and a successful track record. As a result, it will be very difficult to attract money partners for a joint venture opportunity. While friends and acquaintances might not lend you money or JV with you, there is a chance that family members will step up to the plate! The people closest to you might contribute the funds as a JV partner as long as they know you will protect their investment and make every effort to make money for them. I know parents, sisters, uncles, and cousins who have loaned money to family members in return for part ownership in the property. Always hire a lawyer who is experienced in real estate joint ventures to write the agreement and the family member should obtain independent legal advice before signing it. Most of all, remember that joint ventures are long-term business arrangements and choosing the right family member or partner is critical.
Try the Owner-Occupy Strategy
Most real estate investors buy properties that they will never live in or occupy. However, the owner-occupy strategy is becoming more popular with first time home buyers and investors. The strategy is used when someone buys a property that has two or more units, and then lives in one of the units while renting out the other(s). For example, my client recently purchased a single-family home with a basement apartment with a 5% down-payment. He is now living in the basement and the main floor unit is rented to a tenant who pays monthly rent. While this strategy is not for everyone, it can allow individuals to become homeowners and investors much sooner than otherwise thought.
Work in the Real Estate Industry
Real estate investing is not a race and it is okay to save up until you have sufficient money to buy something without taking unnecessary risks. Why not gain valuable real estate industry experience and save up until you have enough money for a purchase? The following jobs are not exactly the same as investing and all require training and expertise, but they will provide you with some of the knowledge that investors need.
- Deal Finder
- Property Inspector
- Home Stager
- Mortgage Broker
- General Contractor
Tony Miller is an award-winning investor and Investor Focused Realtor with EXIT Realty Matrix. Send him a message at firstname.lastname@example.org