Establishing a career right after college is one of the most challenging things to do for graduates. Moreover, it is very challenging to start a business with no money on hand. Therefore, real estate investing might be the answer for recent graduates as it offers a variety of options that they can benefit from. So, hang on and learn how to become a real estate investor and how to start investing in real estate with no money.
As you might know already, it is hard to start anything at all without money. Therefore, we do not mean that you can actually invest with no money literally. In fact, we mean that you could start investing with as little as a couple hundred dollars on hand. After all, you will need some money for marketing and putting yourself out there on the market. Here are some tips on some financing methods to consider:
Related: 4 Amazing Real Estate Investing Books That You Should Read.
First: Start investing in real estate with no money by borrowing it
Borrow from family or friends
Yes, you can borrow the money. It is also the most traditional financing method for investing in real estate with no money that is available to almost everyone. It is especially common amongst those who consider becoming real estate investors. If you think about it, you have so many sources from which you can get the money. Look around and check your family or friends. You most definitely will find someone who is willing to help finance your business. However, keep in mind that borrowing from a family member or a friend does not mean that you do not need to provide your borrower with guarantees of repaying. As long as you present him/her with a business plan and a repayment strategy, things should be OK.
Check banks and private lenders
Another way to finance your business is getting a bank loan or even through a private lender. Loans are the most common financing methods for investing in real estate with no money. There are plenty of loan programs that are available to you. All you have to do is make sure that a specific loan program serves your goals and is realistic. Do not fall for loans just because they offer a lot in return for so little. You have to make sure that the terms are right for you and that you will be able to handle them. Otherwise, you will be the one responsible. The last thing you want is getting into financial issues right after graduating.
Also, you can apply for an owner-occupied loan. When you apply for it, the financing party will require that you live on the property for a while, usually for a year or two. Then you can move out and rent out your property under the same terms. It is a great financing strategy because you can apply for the same loan every year or two to invest in more rental properties. It will help you build your real estate investment portfolio faster, and you will use the rent from your properties to pay the mortgage.
Ask for owner financing
One more option is applying for seller financing. This financing method is the literal meaning of investing in real estate with no money. Basically, it means that you agree with the owner that you pay him/her each month instead of paying to a bank. Well, if you were to do that ten years ago, it would have been suspicious because banks had fewer requirements. It was easier to get a loan back then. Now that it is harder to get a loan, it is normal to ask for owner financing. You rent it out and start paying the owner directly. Keep in mind though that the owner might ask for a higher price in this case. But if you are just starting fresh after college, it does not matter as long as your tenants are the ones who are going to pay for it each month.
Related: Do Not Let Rental Financing Discourage You From Becoming a Real Estate Investor
Second: Start investing in real estate with no money by choosing the right strategy
As you already know, the real estate investing business offers a variety of investment strategies to go with. Besides being lucrative, they are also flexible. Though there are strategies that require huge financing, there are also options for investing in real estate with no money. Here are some investment strategies that you might want to consider starting with:
Creative real estate investing
It is easy to start investing in real estate with no money if you choose creative real estate investing. The creative real estate market offers you a wide choice of strategies that you can go with. One of them is house hacking. This strategy is very common, especially, for beginner real estate investors. You can buy a rental property with no money using house hacking. All you have to do is get a loan, buy a multi-unit property, and live in one of them as you rent out the rest. The monthly rent you collect will take care of your loan payments each month and leave some extra cash flow for you. You can use this cash flow either for investing in another property or for repaying the loan you already got faster.
Real estate partnerships
Getting into a real estate partnership is a little tricky. However, it is not difficult if you have what it takes. It is also considered a good and safe financing method to go with. Find a real estate partner who is willing to finance your investment business in return for good deals and expertise. You have to make sure that you actually have something to offer. Present your business plan to potential real estate partners and make it convincible.
Keep in mind that your partner might not have all the money required. Still, he/she can help you qualify for a loan by helping out with the down payment for buying an investment property.
Related: Real Estate Investment Partnerships: The Pros and Cons of Investing With a Partner
Last thought on investing in real estate with no money
As you have read above, it is actually possible to start investing in real estate with no money right after college. However, you have to educate yourself on all the financing methods available. Finances are risky, and you have to make sure that you are ready to handle them. If you want to learn how to become a real estate investor and how to buy a rental property, sign up for Mashvisor. You can find all the information and tips you need on buying an investment property and many alternative investments as well.