How to Become a Landlord With No Money
This one is pretty simple, if you’re wondering how to become a landlord with no money, invest poorly, it’ll happen pretty quickly. Seriously though, it is very possible to become a real estate investor, even if you have no ready cash to secure your first investment. All it takes is patience, some creative thinking, a few people willing to co-operate with you and a competent real estate attorney to draw up your deals.
Working conventionally, you’d have a ready source of cash to make the down payment on your first investment property. However, if you don’t have cash in hand, you can always present an offer on a property wherein the seller finances the transaction. In exchange, you can offer a number of concessions, such as larger monthly payments for a certain period of time to help the seller recoup the down payment they’d forego. Then, after appreciation has allowed you to build equity in the property, you can refinance it in the traditional manner and buy the seller out. Just make sure the deal you craft enables to you rent the property out and generate positive cash flow in the interim.
Lease with the Option to Buy
In this situation, you can work out a deal with the seller to lease the property at a certain rate, for a certain period, with the option of purchasing it at the end of the term. This way, a portion of your monthly lease payments would be credited toward the purchase price. Or, you could work out a deal where a portion of your monthly lease payment is credited toward the eventual down payment. Once you hit that number, you can then apply for a conventional loan, with your lease equity serving as your down payment. Just make sure you settle upon a purchase price upfront, have permission to sublet, and your lease payment leaves you room to generate positive cash flow.
Assume an Existing Mortgage
If the seller’s mortgage permits, this is an easy way to get into a property with minimal cash outlay. Keep in mind your credit rating will need to be very strong to pull this off. The financial institution will scrutinize you just as thoroughly as they would if you were coming to them for a home loan on your own. The only difference is the seller will serve as something of a co-signer with you. If you default, the property and the mortgage will revert to the seller.
Take on a Boarder
If you already own a home and would like to get into real estate investing, but don’t have the liquid cash to make a down payment, rent out one of the rooms in your home. You can then use the cash you accrue to serve as an eventual down payment on a full-fledged rental property.
Partner with Family and Friends
If you have a knack for getting along well with people and you’re good at fixing little things that go wrong around the house, consider assembling a consortium of family and friends who together have enough cash to make a down payment. Offer to manage the property for them as compensation for allowing you a share in the investment. You’ll find the property and handle all of the physical activities of being a landlord, while your investors serve as silent partners.
Yes, things are much simpler when you have the cash at hand. But even if you don’t, there are many ways to become a successful landlord with no money if you’re determined enough.
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