By Bigger Pockets
1. House hack.
House hacking is this really awesome strategy where you purchase a small duplex, triplex, or fourplex, live in one unit, and rent the other units out.
It’s especially awesome for two reasons:
First, almost anyone can qualify for an FHA loan, which requires a down payment of just 3.5%.Second, it’s like training wheels for landlording. Not a lot can go wrong when you live next door. Of course, you don’t have to live there forever. Soon, you can turn it into an awesome rental property that will hopefully provide lifelong passive income.
2. Try home equity loans/lines.
Do you own a home right now that has equity in it? In other words, is your home worth more than what you owe on it?
If so, you can potentially obtain a home equity loan or line of credit and get access to that money, which you can use as a down payment or maybe as funds for the entire thing if it's enough. Pretty cool, right?
OK, on to number three.
3. Use seller financing.
Seller financing is amazing, but it confuses a lot of people, so I’m going to explain it using an example most people can easily grasp.
Imagine I sold you my car, but instead of you getting a loan and giving me cash, you just make payments to me every month. Each month, you give me $200, and after a few years, you've paid it off.
That’s seller financing—and it works the same way in real estate.
Seller financing is basically where a person decides to sell you their property, but rather than making you go get a loan, THEY provide the loan themselves, and you make payments based on whatever terms you set up together.
Like selling a car on payments, seller financing works best when the property doesn't have an existing loan already on it. That can get kind of sticky with the banks, so look to do seller financing on properties where the current owner doesn't owe anything on it.
4. Look into partnerships.
I love partnerships. You see, when I first got into the real estate investing game, I wanted to buy properties, but I’d go to the bank and they’d basically laugh at me.
But then I discovered the power of partnering. I realized that if I lacked the money to jump into a real estate deal, I bet there were others out there who lacked the knowledge.
So, I quickly discovered a powerful formula for no-money-down success, and I call it “the deal triangle”—because it looks like a triangle. I know, I’m super original. If you have a better idea, put it in the comments below this post.
OK, the deal triangle is simple. On one side, you have MONEY. Then, you have KNOWLEDGE. Then, you have HUSTLE.
Now, here’s the key that’s going to change your life: Pick two.
That’s it. People often think they need all three. But in reality, you just need two.
If you don't have money, just gain the knowledge and use your hustle to make it happen. I can guarantee you there are a lot of people out there with money, or at least the ability to get a loan, who don't have the time to hustle.
If you don’t have the knowledge, then pick up a few books about real estate investing, like some of the books I’ve written at BiggerPockets.com/store or watch some of our Youtube videos or listen to the BiggerPockets Podcast. Just don’t spend $50,000 on some late-night TV guru with bad hair.
Then, start hustling. Attend local real estate meetups and find people who might be great partners. Then, get it done.
5. Explore hard money lenders.
Let’s say you want to fix up and sell a house—which we call “house flipping”—but you don’t have any money and don’t have enough experience to get someone to give you the cash. What do you do?
Well, lucky for you, there are these businesses called hard money lenders and basically, that’s what they do.
They are super expensive, but they can be a great source of financing for a real estate deal. Just be sure that when you do the math on your flip, you include the cost of paying the expensive hard money rates and fees.
And speaking of doing the math, our last tip of the day…
6. Get an incredible deal.
Look, when you find amazing real estate deals, financing becomes much easier—no matter how much cash you have or don’t have.
Because great deals are the foundation of creative financing.
If you have an incredible deal, you’ll likely be able to find financing, whether it’s a private lender, a hard money lender, a bank, a partner, or something else. Become super incredibly amazing at doing the math and you'll find that financing deals is the least of your problems.
(And if you want to see the way I run the numbers, I host a free online webinar every week here at BiggerPockets, where we find and analyze deals live.)
So, are these the only ways to invest in real estate without cash or experience? Of course not.
There are so many ways to put together real estate deals that a person could write an entire book about it. 😉
But also, understand this—in the words of the late, great Jim Rohn: “If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse.”
It’s time to lose your big buts and decide, once and for all, if you really want this.
Then, go out and get it.