These are the most tried-and-true ways to invest in real estate with no money. Some of these methods will sound familiar – but they’ll have a twist to ensure your success in the market we’re about to enter.
Other methods might be unfamiliar to you. They’ve fallen out of popularity the last 15 years, but rising interest rates will bring back their usefulness.
1) BRRRR with No Money Out-of-Pocket
Buy, rehab, rent, refinance, repeat. That process becomes easier the better your deals are. And as we see more foreclosures happen in the near future, and more people are sitting on the market, you’ll have the chance for better deals.
To get BRRRR properties with no money out-of-pocket in this market, though, you’ll need a good deal. What makes a deal good? One of the best guidelines is the 75% Rule. As long as the property costs 75% or less of the ARV, you can get into that property with zero money down.
(Even following the 75% rule, you’ll need to qualify for a bank loan, so you’ll have to be sure your credit’s good.)
We’ve had a lot of success helping people with BRRRRs in down markets. Around 2010, we would often do ten properties every year for couples. They built real estate portfolios with no money from their pockets.
2) Subject Tos with Zero Down
As properties get stuck in the market longer and interest rates rise, subject tos will become a great way to invest using no money.
A subject to is when you go on title, own the property, and take over mortgage payments – but leave the existing mortgage on the property, in the seller’s name.
What good does this do for you as the buyer?
- Loans on subject to properties were originated two or three years ago, with 2.5-3% interest rates. Much lower than if you were refinancing for yourself in the current market.
- You don’t have to refinance. It’s not on your credit, not based on your income, and you don’t have to go through underwriting.
- The loan is probably already a few years into amortization. So every payment becomes lower – all without you needing to qualify for anything.
- You can accumulate a large portfolio without the hassles of finding the money.
More on subject tos later in this article.
3) Owner Carry with No Money Down
Here’s another way to invest in real estate with no money that has been out of the picture for awhile: owner carries.
An owner carry deal is somewhat similar to a subject to, where the buyer gets ownership of the house without taking out their own mortgage. But in an owner carry, the buyer doesn’t pay the property’s existing mortgage. Instead, the owner owns the home outright, so the buyer gives them mortgage payments directly.
Owner carries can be especially beneficial when you’re the seller. But an owner carry is also a potentially good option to invest without putting much, or any, money down.
Here’s an example of a recent owner carry deal we helped with:
A client was selling their parents’ property. They were planning to put the money in the bank and live off the interest.
Instead of settling for the 1% or 2% interest they’d make in the bank, we helped them with an owner carry. So they:
- Sold the property.
- Put a lien on the property so they held the mortgage.
- Received mortgage payments from the buyer at closer to a 4% or 5% interest rate.
You’ll probably have more luck finding subject tos than owner carries. Not many people own a house free and clear, or take over a property without a mortgage.
Read the full article here.
Watch the full video here: