If you want to invest in real estate but don’t have enough money to begin, don’t lose hope! There are more than two ways to invest in real estate, and not all of them include shelling out money from your pocket.
We’ll tell you how to begin your real estate investment using other means, such as loans and partnerships. Overall, it all boils down to your ability to recognize, understand, and grab opportunities when you see them.
Here are six ways you can invest in real estate while being smart about your money:
1. Seller Financing or Purchase Money Mortgage
The best way to invest in real estate with little to no money is through seller financing. That is when buyers can’t secure a loan from banks, and so they can seek real estate financing from sellers instead.
When it comes to traditional real estate transactions, buyers gain ownership of the property by paying cash. In the case of purchase money mortgage, the seller extends the financing to the buyer, and then the latter pays back according to the agreed terms.
2. Lease Option
Under the lease option, the seller charges the buyer a monthly or yearly premium in high rental charges. The excess rental will be allocated to the property’s purchase price. That way, the buyer can invest in real estate by paying higher rental fees.
Microloans are most known for financing startup businesses that need resources to generate growth. However, they can also be used in real estate investment. As the name suggests, microloans are comparably smaller than traditional loans offered by banks and other financial institutions. The lower financing means these programs are less strict with their qualification requirements, including credit scores.
3. Real Estate Partnerships
If a property’s price is out of your reach, a real estate partnership or equity partnership is your best choice. An equity partner is someone who helps you finance property and is directly involved with the transaction. The structure of the partnership is entirely up to what the buyer and their partner have agreed on.
4. Home Equity Loans
Home equity loans are a great option if you want to invest in second real estate property. Manny investors capitalize on their primary home’s equity and then use that to finance another property. Banks and other financial institutions provide different financing terms, including Home Equity Line-of-Credit and Home Equity Installment Loan. These allow the buyer to capitalize on equity that already exists.
5. USDA Loans
The U.S. Department of Agriculture’s Rural Development sector created this loan to fill underpopulated areas in the country. Under the USDA loan program, you can get a mortgage with down payments that go as low as zero percent.
However, this loan is only offered in towns with a population of 10,000 or less. You need to qualify for a moderate to low income to get the USDA loan. It’s also mainly for rural and suburban homebuyers who can’t get approved for a traditional mortgage.
Real estate investment provides a safe and steady cash flow with minimal risks. It is a recommended investment for beginners because of the high probability of exponential value increase over time. If you don’t have the finances to invest in real estate, then the six options above should help you.
DFW Investor Lending is a private lender for real estate in Dallas, operated by fellow investors. We make hard money lending easy for residential real estate investors. But most importantly, we’re a Direct Lender, not a mortgage broker, a middleman, a loan officer, or a banker. We provide funds out of our private capital sources. So as fellow investors, trust us when we say we get it.
In today’s fast-moving markets, real estate investment is your safe bet. Begin your investment today with DFW Investor Lending.