How to Make Money in Real Estate with No Money- 6 Ways That Work

1. Rental Properties

Owning rental properties can be a great opportunity for individuals who have do-it-yourself (DIY) renovation skills and the patience to manage tenants. However, this strategy does require substantial capital to finance upfront maintenance costs and to cover vacant months.

Pros Provides regular income and properties can appreciate Maximizes capital through leverage Many tax-deductible associated expenses Cons Managing tenants can be tedious Potentially damage property from tenants Reduced income from potential vacancies

According to U.S. Census Bureau data, the sales prices of new homes (a rough indicator for real estate values) consistently increased in value from the 1960s to 2007, before dipping during the financial crisis. Subsequently, sales prices resumed their ascent, even surpassing pre-crisis levels. The long-term effects of the coronavirus pandemic on real estate values remain to be seen.

Source: Survey of Construction, U.S. Census Bureau

Mortgage lending discrimination is illegal. If you think you’ve been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).

5. Look for a lease purchase option

If a traditional mortgage is not suited to your financial situation, another proven way to invest in real estate with no money is through what’s known as a lease option or a rent-to-own home.

Under lease options, the property owner charges the buyer a monthly or yearly premium, in the form of higher rental payments. The excess rental fee will then be channeled towards the purchase price of the home.

With this type of agreement, you may be able to invest in real estate via a slightly higher rental fee.

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4. Sell Wholesale

A fourth way to make money in Real Estate actually can require the investor to have cash, although it is not required. 

This technique is by far the best and easiest way for new, inexperienced investors to make “quick” money in Real Estate. In fact, this is by far the best and easiest way for veteran and seasoned investors to make “quick” money in Real Estate.

Wholesaling is the art, and I use that word on purpose, of being able to accurately appraise the potential value of a property and buy it so low, you can quickly sell it for cash to another rehabber or end user who will make it their dream home, without EVER fixing a thing, regardless of how good or poor the condition of the property.

Now, you may say, I do not need cash for this strategy.  I can simply Option the property for a wholesale price and then sell it to a rehabber or end-user. You are absolutely correct, but getting an owner to accept a wholesale price is rare. 

You will make 100 wholesale offers to owners before one is accepted. 

Where you will have much better luck is buying foreclosures from banks.

While a majority of your initial offers will still be rejected by banks, they are much more likely to accept a wholesale offer. They also will never allow you to Option the property. They only accept cash and will even require you to have Proof of Funds before they even look at your offer. 

5. Real Estate Investment Trusts

Real Estate investment trusts (REITs) are an alternative to buying real estate directly. Best of all, you don’t need much money to buy into a REIT. Think of a REIT as a pool of real estate assets, which are managed by a real estate professional and traded freely on the stock market exchange. REITs offer some of the same attractive features of stock investing. You can often buy fractional shares and invest with small minimums. For example, Fundrise offers a REIT with a $500 minimum investment.

REITs can be a low-risk choice for passive real estate investors, providing the ability to diversify across many property types and multiple geographic locations. There are REITs that pay dividends, so they can become part of your income portfolio. The idea behind REIT investing is to participate in the often higher returns of real estate assets without owning or managing any real property.

Exchange Property

If you already own property, you may want to exchange it for another property. You could either exchange the property with a buyer, or use it in combination with a small amount of cash to obtain the property you want.

8. Wholesale Properties to Investors

Think about the amateur-looking signs on the side of the road that say, “we buy houses” or the postcard you get in the mail pitching, “a lump sum cash payment for your home in 30 days with no showings or closing costs.”  As a wholesaler, you find motivated sellers and promise to buy their house for cash in 30 days—but you’re not the one ponying up the cash.

Instead, you negotiate a cash price in “as is” condition and provide them with an “assignment” contract which allows you time to get a cash buyer to purchase the house for the price you promised the seller (plus your fee) and “assign” the contract to them.

To be successful, you need to know what cash price will make the seller happy while allowing enough “spread” for a rehabber to make a profit after he pays the acquisition price, renovations and repairs, holding costs and selling costs. To do that, you must recognize what rehab needs done, know the local markets, be able to accurately estimate the numbers (such as repair costs, property market values before and after repair, closing costs, etc.) and be a good negotiator. Wholesaler fees between $5,000-$15,000 per deal are typical. Some wholesalers make $25,000-$30,000 per deal.

To be successful, you need a lot of hustle and you will need a budget for advertising—most wholesalers find motivated sellers through direct mail and cold-calling.

5. Real Estate Crowdfunding

Real estate crowdfunding is a relatively new entry into the real estate investing world. It allows you to invest a smaller amount of money (like $1,000 to $5,000) alongside a group of other investors (i.e. the crowd).

These crowdfunded investments can be rental properties (usually larger multi-unit properties) or loans to other real estate investors (i.e. hard money loans).

I have been experimenting with this strategy on my own for a couple of years. But because the legal structure and companies are so new, I’m still a little cautious.

For example, my business partner had some money with a company called RealtyShares, and they basically shut down their business last year. No money has been lost (yet!), but it shows the risk of investing with start-up companies that are strapped for cash.

So this means that while I like the overall concept, I’m keeping my investment to a relatively small percentage of my net worth, and I’m spreading it around to different companies for now.

A few of the companies I have my eye on or have invested with so far include:

    • Peer Street – residential loans to other investors that typically earn 7-8% interest
    • Equity Multiple and Crowdstreet – pre-vetted commercial projects or diversified portfolios of commercial projects

*These may be affiliate links, which means my site earns a small commission (at no cost to you) if you use their service. Thank you!*

In these particular cases, you must be an accredited investor in order to invest. This means you must have a net worth exceeding $1 million (without your home) and/or an annual income of over $200,000 for the last two years (or $300,000 for a couple).

There are other crowdfunding platforms like Fundrise.com that do not require you to be accredited. But the investment style is slightly different, and it’s more similar to a REIT – which I’ll talk about next.

1. House Hacking

My first house hack 4-plex (I lived in unit #2)!
My first house hack 4-plex (I lived in unit #2)!

House hacking is one of my favorite ways to start investing in real estate. It basically means you figure out a way to generate rental income from your home.

A classic house hack is moving into a small multi-unit property, like a duplex, triplex, or 4-plex. Then you rent out the extra units for income.

You can also get creative by renting out extra bedrooms to roommates, renting out a basement apartment or guest house, or even renting extra space on your lot to an RV (if your local laws allow it).

And all of this can be started with little money down because you can obtain owner-occupant financing to buy the property. Here are a few loan programs with small down payments that you can use for house hacking:

  • FHA loan (3.5% down)
  • VA loan (0% down for veterans)
  • USDA (0% down in rural areas)
  • Conventional loans (3% to 10% down with mortgage insurance)

With a $200,000 property, for example, this means you may put $0 to $7,000 down with some of these programs!

>> Want to get started? Check out my house hacking guide. <<

3. Home-renovation flips

The fix-and-flip culture has exploded. Thanks to the popularity of home renovation shows, we’re experiencing a massive boom in the traditional renovation flip market. While there can certainly be a lot of money to be made here, navigating these waters in the beginning can be tricky. When you lack the knowledge or the experience, you could find yourself on the losing end if you don’t select the right home.

Matt Larson has flipped more than 2,000 homes in Iowa and Illinois. Over the course of that time, he’s learned some lessons on what to look for and what not to look for when flipping a home with a renovation. His advice? Go after the ugliest homes in the nicest neighborhoods. That’s where the real value is. The other difficulty here is not only finding those homes when you’re not well-networked with real estate agents, but also understanding your after-repair value.

How much will the home be worth once you’ve invested in fixes and repairs? To accurately determine that, you need a strong relationship with a general contractor and an on-site tour of the property. While buying site-unseen at an auction might seem alluring, unless you really know what you’re doing, you could lose money. However, making money on a home-renovation flip can be rather straightforward — as long as you understand the underlying costs and potential value.

John and Julie Wakefield, a husband-and-wife flipping team who’ve done hundreds of flips, say something similar. They advise not to bite off more than you can chew, and more importantly, you should look for creative ways to help others. Success as a real estate investor has as much to do with how creatively you can solve problems as it does how well you can crunch the numbers. 

Related: Buy a Rental Property Before Year-End: Why and How

Avoid Becoming House-Poor

There is a phrase in real estate and finance called “house-poor.” The term describes people who stretch themselves too thin when buying a home and are left without any emergency money. When unexpected events happen, such as a job loss or broken appliance, these homeowners are in such a tight spot financially that it is difficult to recover. Unfortunately, this is all too common when attempting to invest in real estate with no money.

There are a few ways to avoid being backed into a corner financially when purchasing real estate. It is always a good idea to keep your emergency fund separate from other money and not include it in your estimates when buying a house. That way, if anything were to happen, you have funds you can rely on. In some cases reserving your emergency money may force you to make a smaller down payment than you want. Remember that even if you are required to get mortgage insurance initially, you can always refinance down the road when you have more equity in the home.

Best Ways to Start a Property Business with No Capital

 

Once you have developed a positive attitude and mi

Once you have developed a positive attitude and mindset where you believe, are passionate that you can become a successful real estate entrepreneur, and you have also learned the basics of real estate investing, you are ready to launch into the real estate world even with zero capital.

Here’re some effective ways to start a property dealing business with zero money in your pocketstrategies you can learn and transfer in other industries as well:

 

1. Facilitate Lead Generation

 

Lead generation is important for all businesses, and real estate business is no exception. 

Irrespective of role in a real estate business, you need to have a constant flow of leads to get more business. Having a lead pool is vital for all kinds of real estate businesses, be it a mortgage lender, realtor, or even house flipper. 

With the number of leads that get converted into real business deals typically low in the property sector, every real estate businessperson looks forward to getting more and more leads. Therein lies an opportunity to get your foot into the real estate door. 

If you don't have any initial capital to invest but still want to enter the real estate property market, then becoming a facilitator of leads for existing real estate businesses can be a good option. You can become a link between the buyer and enthusiastic real estate agents and realtors.

To become successful in this line of work in the real estate sector, you can always start generating leads at a local level. You may also use your contacts to find if anyone in your network or locality is looking forward to either buy, rent, or sell a property. 

Steps you can follow in a real estate lead generation business include:

  • First find clients or agents who are looking for a property and create your database of the interested parties.
  • Then search for sellers. (This can be done on the internet).
  • Once clients are identified, sell your leads. Price per lead will depend on the locality and the quality of the lead.

Be honest with your leads always to generate high-quality leads.

 

2. Partner with an Investor

 

Securing an investor as your partner can open flood gates of new opportunities for budding real estate entreprenurs. So, if you find an excellent property for investment but you don't have resources to close that deal, you can always look for someone with the finances and convince them to invest money and help you in closing that deal.

Many investors already want to invest money in real estate, but they either don't have time or don't want to handle all the administrative or managerial tasks related to property investment. You can become a partner with such an investor and fulfil your dream of running a successful real estate business, while the investors gets a hassle-free opportunity to invest in real estate.

Such partnerships are especially ideal in rental or fix and flip property dealings. Be sure to carefully work on partnership terms with the investor. 

If you have good managerial and administrative skills, you can start your own real estate business without money and worrying about finances. You just need to be proactive and find the right partner who can take care of the financial requirements of your business. 

 

3. Use Investment Leverage

 

Using leverage in an optimized manner is an art. In this case, the investor can use borrowed funds put in property dealings as their leverage. However, one has to be very sure when making such investments. The aim is to get a higher return on investment in comparison to the rate of interest levied on the borrowed money.

If you don't have money to start your real estate business, then using leverage can similarly be a very good option. You can borrow money against the equity of your existing property. You can then invest this borrowed money to buy a new property. This way, you can start your property business by using the borrower's money.

 

4. Sign-Up for Rent-to-Own Investments

 

Another way to start a property dealing business w

Another way to start a property dealing business with no capital is through rent-to-own-investment. Many people use their lease agreements as an entry path for property estate industry.

In this case, the investor signs the buy option while renting the property. This means that the renter can purchase the property at a particular time, as per the terms mentioned in the rental agreement. By following this method, the investor can lock the promising property and still keep on looking for other new options.

 

5. Sell Property on Behalf of Developers

 

If you have no money and still looking for opportunities to start your own property estate business, why not start a business selling property on behalf of developers? 

New housing and residential projects keep coming up in the market. You can contact developers and sign a contract to sell their properties for a cut of the sale price. 

Using this strategy, you may opt to advertise and sell the developer’s properties and earn a commission on each closed deal. The commission or cut may vary from project to project and also depending on the type of property sold.

Obviously, commissions earned for selling luxury properties is much higher compared to the budget segment properties, so you might want to target the high-end properties.

You can easily search and find new property developers online or within your local area.

 

6. Help to Close Deals and Get Your Cut

 

If you have no money out of your pocket for real e

If you have no money out of your pocket for real estate, you can also offer a service guiding clients through home searches with an unbiased eye so that they can meet their buying objectives while staying within their budget. In this role, you essentially become a real estate agent or realtor.

Many realtors don't want to get into the complication of registration of the property. They act as a middleman between the buyer and the seller. Some also provide clients with answers about local utilities, ammenties, contractors, and more. Once the deal is closed, they take their cut and move forward. They leave registration as the concern of the developer.

You can also give your clients expanded propery search power, close deals, and get your cut.

 

7. Look for seller financing

Another way to acquire property with no money down is with help from the seller.

Known as “owner financing" or “seller financing,” this type of loan is an agreement where the seller handles the mortgage process instead of a financial institution.

The borrower repays the loan as specified in its repayment terms that are detailed in the formal agreement.

This works especially well with sellers who have no mortgage.

For example, this can happen when someone inherits a property and does not want to keep it.

For sellers that are willing to take on the role of financier, owner financing can help sellers move a home faster with sizable returns on their investment.

5. Short sales

Short sales occur when the current owner of their home is behind on their mortgage but the property hasn’t yet entered into foreclosure. In order for this to happen, all parties have to agree to the transaction since the property is being sold off for less than is owed on the existing mortgages. This can be a great opportunity to make a quick profit without investing into lengthy renovations.

However, succeeding with short sales or any other default-type auctions is often tricky. You usually need to pay for the homes outright in cash, and sometimes that has to happen site-unseen. Short sales are better than auctions because you get a chance to check out the home and enter into a negotiation process. Unless you’re a seasoned investor, jumping in without an inspection and complete review could be risky.

Short sales take time, but they can be well worth the wait. The potential return on a short sale can be instantaneous. Tens of thousands to hundreds of thousands of dollars can materialize as soon as the property purchase goes through because the bank is engulfed in a bad investment. But don’t expect to get the property for a steal — you’ll still have to negotiate a relatively fair price. Depending on how badly the bank wants to unload that property, it could sit around and wait for another buyer, so don’t try to low-ball too far.

Related: ‘For Sale by Owner’: the Benefits of DIY Real Estate

Exchange Your Skills

A buyer may be able to offer skills instead of cash. Accountants, contractors, mechanics, plumbers, doctors, lawyers, and so on, all have tradable skills that would be useful in lieu of a cash down payment.

1. Online Real Estate Investing Sites

Online investing sites have changed the game in recent years. With these sites, you can own fractional shares of real estate projects. What this means is that you can get exposure to real estate, but you don’t need to come up with huge sums of capital or deal with tenants. This is a strictly passive income strategy.

Fundrise is my top pick in this category because you can start with very little money and you do not need to be an accredited investor. Here’s a link to our full Fundrise Review.

For other sites, you must certify that you have a net worth over a certain amount or make a certain amount of money per year.

How It Works

With Fundrise, you can start with as little as $500. You open an account and select from a number of portfolio options. Fundrise charges a management fee of around 1% per year, which is fairly low compared with other options, and its 2021 annualized return was 22.99%! You can see how my Fundrise account has performed here.

What You Gain

Investing this way, you gain a ton of freedom and you gain exposure to the real estate asset class with very little money or effort. 

What You Risk

You don’t get to really use any local expertise you may have, and you don’t necessarily get the pride that comes from visiting a real estate project that you wholly own, improve, and can see easily. For some people, that’s a big draw to investing the old-fashioned way!

Get Started With Fundrise

The Bottom Line

Whether real estate investors use their properties to generate rental income or to bide their time until the perfect selling opportunity arises, it's possible to build out a robust investment program by paying a relatively small part of a property's total value upfront. And as with any investment, there is profit and potential within real estate, whether the overall market is up or down.

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