Ever wondered how people buy real estate with no money and no credit? Here is the answer and the strategies people use to invest in real estate with OPM – enjoy! Add me on Snapchat/Instagram: GPStephan
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First way: Generally, when people say theyβre βinvesting in real estate with no money and no credit,β theyβre usually referring to wholesaling. The way wholesaling works is that you find a distressed seller willing to sell a property under market value. You, as the wholesaler, get that property under contract – and that contract is written to be assignable to someone else. You then go and find someone else to pay MORE for that property than youβre paying, you ASSIGN that contract to the new person at the HIGHER price, and you get paid the difference.
Second way: Seller Financing. This is when the SELLER βloansβ you the property, and instead of paying a mortgage to the bankβ¦your mortgage is directly with the seller. Typically this will only work, however, with owners who own the property outright, AND owners who donβt need the money and are cool just collecting their money every month. For the seller, this typically means they can get a higher rate of return than if they kept the house, it means theyβre not responsible for handling repairs, and their return is backed by the house – so they can foreclose if you donβt keep your end of the bargain.
Third way: Bring on an investor or partner. This is something that you can typically do once you get more experienced in real estateβ¦someone brings in the money to the deal, and you do all the work – you find the deal, you renovate it, you add the value, and you manage it for a percentage of ownership. The other person simply just passively invests and thatβs that. However, doing this comes with a LOT of risk and you better know what youβre doing. Anytime you have someone elseβs money at stake, you better treat it like your own – probably even be MORE careful than you would normally.
Fourth way: A lease option. Lease options work like thisβ¦lets say I own a property for $100,000 and you want to buy it, but donβt have the money. Iβll say βHow about this. The market value of my house for RENT is $1000 per month. But if you want to buy it, pay me $1200 per month and you have the right to buy the property from me within the next 24 months for $110,000. Your base rent will be $1000, and that extra $200 you pay me every month will be appleid to the purchase price. So after 24 months of paying $200 extra, you will have paid down the purchase price by $4800, meaning the total cost of my property at that time will be $105,200. If you donβt buy it, thatβs fine and I got an extra $200 per month. If you do, then thatβs the purchase price.β
Iβve discussed 4 ways that you can buy real estate with no money and no credit. But, this isnβt something easyβ¦thereβs a reason why you donβt see people doing this all the time. Itβs a LOT of work to find a good property in and of itselfβ¦combine that with finding a seller whoβs amenable to the terms, combine that with them generally owning it outright and not needing to sell immediately, and finding a seller who will sell at the price you want to pay. Itβs all doable, but by no means do I necessarily think itβs a good idea to chase after. Personally, I think your time and resources are best spent earning money, saving, living below your means, and waiting it out for the right property to come up – itβll give you more options at your disposal. But for those who were curious and wanted to knowβ¦now you know.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com
Suggested reading:
The Millionaire Real Estate Agent:Β http://goo.gl/TPTSVC
Your money or your life:Β https://goo.gl/fmlaJR
The Millionaire Real Estate Investor:Β https://goo.gl/sV9xtl
How to Win Friends and Influence People:Β https://goo.gl/1f3Meq
Think and grow rich:Β https://goo.gl/SSKlyu
Awaken the giant within:Β https://goo.gl/niIAEI
The Book on Rental Property Investing:Β https://goo.gl/qtJqFq
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