Real estate is one of the safest and most lucrative forms of investment. Real estate is always in demand, and property prices are not known to slump. Real estate investments are known to double, triple and increase manifolds, in short spans, ensuring a neat profit.
What is investment real estate?
Investment in real estate alludes to owning a property with the explicit purpose of earning profit. The earnings could either be from earning an income from renting the property or through appreciation in the property’s market value. Rental income gives an immediate return on investment (ROI), whereas appreciation in the market price is a long term investment, where the returns are substantial, but the wait is longer.
Property investment requires funds, but what if we were to show you ways of investing in real estate with little or no money. It can be done, with a bit of strategic planning. Do not worry; it is all legitimate. We dare not suggest anything illegal and unlawful.
To invest in property, when you do not have the money, you first need to understand market trends, recognise opportunities and exploit those to your advantage. When you have no money, you will need to bank on someone else’s money to make your real estate investment(s) a reality. However, you will need to invest a little of your own money to enable you to get a loan. Financial institutions that offer conventional home loans expect the buyer to make the down payment for the property that they want to purchase. We will show you a few ways of investing in real estate when you have little or no funds to finance a property.
Microfinance, as the name implies, are small loans, designed to facilitate small, upcoming businesses and startups to establish and boost their economic activities. The procedures involved in getting microfinance are less stringent compared to those in established financial institutions, and the dispersal of loan is often without collateral. Such loans could work as an excellent funding alternative when you have no money for investing in real estate.
Create a Partnership
Getting into a partnership deal is yet another way of investing in real estate with little or no money. Such an arrangement would require some amount of legal documentation; so exact partnership details can be listed on a legal document, making the agreement binding to both parties.
How does it work? It is simple—you get into an equity partnership with someone willing to finance the property purchase. It is an agreement between you and the financier, and you can engage a lawyer to draw legally binding terms for the same.
A home loan is a financial solution that you can opt for if you lack the funds to invest in a property. Banks and non-banking financial institutions offer home loans at low-interest rates. It is the most acceptable form of loan for financing property. The loan is repaid through EMIs spread over a predetermined period.
Home loans are not difficult to get; in fact, financial institutions tie-up with builders and developers and offer home loans at low-interest rates to those investing in the said properties. Builders in Kochi and other locations provide prospective investors with this unique home loan feature. The property is mortgaged to the financial institution till the time the loan amount is repaid. Also, some financial institutions give the option of foreclosure of the home loan, without penalty.
Builder or Developer Financing
If you fail to secure a loan through the methods mentioned here, you may want to check if the builder or developer will help finance it. This is an unconventional way of securing financial aid for property investment but is not new. Builders and property developers advance loans to buyers in instances where the latter do not qualify for a loan through other avenues. In legal parlance, such a loan agreement is called a purchase-money mortgage or owner-financing or seller-financing.
You will sign a legally binding contract with the builder/developer where they will agree to finance the project, and you will agree to repay it based on the agreed terms.
Private Money Lenders
There are two types of private money lenders—someone known to you, such as relatives and friends, and individuals or groups who are in the business of lending money. Borrowing money from family is an option to consider, as it is generally given interest-free. In contrast, those in the business of money lending charge high interest, but the loans are easy to secure.
There are fewer requirements; for instance, you won’t need a good credit score. Moreover, private money lenders advance loans without checking the credibility of the builder (project), hence the interest rates are higher and the period of the loan shorter. You will still be required to put in your own money into the project, such as down payment and other sundry charges related to acquiring a property.