Today, I’m going to show you if it’s really possible to invest in real estate with no money and whether or not real estate is a good investment.
Almost every dime that I get from YouTube, I get it right back to you guys. Okay. Now back to the topic at hand, there are two so-called strategies to invest in real estate with no money that I’m going to be going over with you here today. The first one being the most difficult, and the second one has been known as the way to amass an arsenal of rental properties in a very, very short period of time.
Which sounds awesome. So is it truly that amazing volt we’re going to find out in today’s. Video. So if you are looking to get into real estate investing, you do not want to miss out on this.
Standard Financing: Slow and Expensive
Now in a normal house bank situation, there are a bunch of expenses involved. First things. First, you’re going to be working with a real estate agent to find a property afterwards you’re gonna be putting in offers on said property where the seller will then have multiple options.
They could accept your offer. They can do a counter offer. And then from there you negotiate terms, sign a purchase agreement along with more paperwork, and you send in your earnest money, which is your first expense. This shows your commitment to buying the property and we’ll then go towards your down payment.
If everything goes smoothly. Afterwards inspections take place. That’s another expense. And then finally come final closing. That is when your full down payment is due. And this is your largest expense by far down payments, typically range anywhere from 3.5% up to 20% of the home’s purchase price. So in a theoretical situation where there’s a hundred thousand dollar house, your down payment is gonna range anywhere from $3,500.
To $20,000 and this is what’s called standard financing, and this is how most people buy their houses, but not you not investors you’re smarter than that. And more creative than that. And to be completely honest, standard financing, it’s just who slow. And so one way to get around this is using seller financing, which is our first method of so-called investing in real estate with no money.
Seller Financing: Real Estate Investing With No Money
Okay. Now seller financing is when the seller of the home acts as the bank and is going to loan you the property. So instead of making mortgage payments directly to a bank like you would with most standard financing, you and said, make payments to the seller themselves, the previous owner of the property.
Now there are some instances where you can assume their mortgage. Or it’s more popular that the seller of the property just owns the property completely outright, meaning that they currently aren’t making any mortgage payments to a bank at all. Now you’re probably thinking why on earth would the seller not just want to get their massive lump sum of money up front?
Like you would normally sell any house? Why would they just want payments every single month? Well, there are a bunch of different reasons, but typically speaking, these are people who don’t need the money right away. Right. And are fine getting payments every single month because for the seller, this typically means over a period of time, they’ll get a higher rate of return on their money, getting your monthly payments, as opposed to just selling it right away.
This also benefits the seller greatly because they no longer have to assume the responsibilities of repairs and other landlord duties that come with owning these rental properties. Now, how on earth do you ever find these deals? Well, it’s very popular for older couples who own rental properties who kind of want to offload them.
They might be interested in seller financing or someone who bought a bunch of properties where they previously lived and then maybe moved out of state or multiple hours away and no longer want to be continually traveling and be responsible for it. Those people might be willing to do seller financing as well.
This is a great opportunity to explore, but I consider this the hardest of the two methods because there’s a lot of negotiation going on with the terms because no longer are you working under the restrictions of a bank? It’s really just person to person at this point. Now it’s also safe for the seller to do this too, because the agreement you have is backed by the property itself, meaning that they can foreclose on you.
If you, for example, just stop paying them every month. This is a legitimate way to invest in real estate with no money. Because, depending on how your negotiation went, you might not need to make a down payment at all. Just assume that the payments every single month.
Wholesaling: Real Estate Investing With No Money
Okay. Now the second method to investing in real estate with no money known as the most lucrative way to amass an arsenal of rental properties in a really quick period of time.
With no money or no credit is working with a wholesaler. So let me first explain how the system works. See if it’s even viable and then see if it actually lives up to the hype. So how the system works is there’s a person that exists a wholesaler, most likely that lives in your community, maybe exists in real estate investing groups that you can visit.
But their sole purpose is to go around. And do different outbound acquisition techniques to find distressed properties. This could be just door knocking. This could be driving around the block to find ugly looking homes. This could be calling directories. You name it. There’s so many different ways, but eventually they’ll find a property that’s in need of a lot of work and they will negotiate with the current owner of that house to see if they’re willing to sell that property right now for cash after negotiations, the wholesaler will get that property under contract.
The wholesaler doesn’t own the property. They didn’t purchase the property. They simply have a contract with the owner saying that him or a buyer will purchase their property for cash at a set amount. The wholesaler, then we’ll take all of their information and send it out to their list of buyers. This would be you all of the different investors, and they’ll give you information like the address pictures, what the place looks like.
And most importantly, the ARV, which stands for after repair value, because you got to understand that these houses are most likely in need of repair, and therefore can have forced appreciation because as you know, if you go ahead and paint a house or add new flooring, You can increase the Valley quite drastically.
So not only is there opportunity for growth on that side of the spectrum through improvements, but because the wholesaler is capitalizing on people in need, maybe they had a recent divorce, maybe they’re strapped for cash. You oftentimes get a really deep discount on the price of the home, as opposed to had they gone through the process of working with an agent and listed it on the MLS.
So two things are happening here. You’re getting a deep discount and there’s opportunity for appreciation. This just makes a massive room for profit for you, the investor. So here’s how the process works. Once the wholesaler sends out the information to you, the investor, you have an opportunity to go ahead and take a look at the property.
Then at this point you can put a bid in for what you would pay for in cash. And I’m going to get to real quickly how you can do this with none of your own money, because I mean, that’s the point of this video, right? So whoever wins the bid, then. There’ll be a minimum amount and everything above that is, you know, free territory of what you could bid for that property.
Whoever then wins the bid will be responsible for paying that set amount. And when I’ll officially own the property, but why is ARV so important and how are you going to get this with no money?
Buy Rental Property No Money Down
Well, there are hard money lenders and commercial lenders. These two people in particular are going to be the ones that are going to lend you the money.
Not only to. Handled the bid and win that, but also do the repairs. So let me give you some examples of how this would work with the real numbers, really. So you understand how this happens now, here’s some real numbers on how this system would work. Let’s say there’s a single family home, somewhere in the Midwest that needs a lot of work done to it.
And therefore the starting bid is around $50,000. Okay. Okay. Now you find out. That had you done $20,000 worth of repairs. This home could be worth a hundred thousand dollars. So this is where the commercial lender and the hard money lenders come in here. Cause we’re trying to get this property with none of our own money.
Right. Commercial lenders will lend up to 70 to 80% of the after repair value of a home. So if the starting bids at 50,000 and you tell them everything that you’re going to be doing to the property stuff like new paint, new flooring, fix up the kitchen and the bathrooms and your whole $20,000 worth of expenses, they’ll do their calculations and their research and find out, yeah.
Okay. This property is going to be worth a hundred thousand dollars. That means they’ll give you $80,000. And what exactly are you going to do with that money? Well, you’re going to go first of all, win the bid, let’s say it ends up being purchased at $60,000. Cause there there’s a little bidding war between you and some competition.
So you get the property for 60,000, you put your $20,000 worth of work into it. That way you’ve used up your entire 80,000 and now you have a property worth, a hundred thousand dollars and you’re $20,000 richer, instantly built in equity right there in the property. But what does this money look like? That comes from the commercial lender?
Well, it’s usually a shorter term, maybe six months or so. And it’s interest only payments. So, what does the process look like then? Ideally, once you win the bid and you now own the property, you do the repairs as quickly as possible, ideally within the first two months. And now once the home is worth a hundred thousand dollars, you then refinance it into a standard 20 or 30 year home loan where you then just make standard mortgage payments every single month.
And that is exactly how you just got a property for none of your own money. From a wholesaler and you’re now $20,000 richer. It’s pretty awesome. Right now, this stuff is real. It’s amazing, but I do have some words of caution. Okay. You cannot always just take a wholesaler’s word for it, especially if you don’t have a relationship with them.
And there’s no trust built around them because anyone can go out and call themselves a wholesaler and try and sell you a really crappy property. So your own due diligence is always recommended. But if you find one of these guys, if you find one of these wholesalers that does a really good job, man, they are a money bank for you is a relationship you definitely want in.
This is why working with wholesalers is known as the most lucrative way to just acquire. Dozens upon dozens of rental properties in a really short period of time with none of your own money. All right. So I hope you guys found this video helpful. Don’t forget to do the three things necessary in order to enter to win the $2,500.
Remember step number one is to like the video step. Number two is to subscribe and turn post notifications on because I’ll be announcing the winner in my community tab and step number three. Comment down below what you would do with $2,500. I’m really excited to announce the winner soon. And I plan on doing a bunch more of these on the channel.
I hope you guys have an awesome rest of your day and I’ll see you in my next video.