Sensible Ways To Invest In Rental Property Even if You Don’t Have Money

Posted on Jun 24 2014 - 9:07am by Davis Miller

Real Estate

Investing in real estate costs a lot of money. However, you can always use a low-down payment to get things started. In the United States, there’s a program that permits homeowners to purchase a home with as little as a 3.5% down payment. If you’re buying a home worth $100,000, this means you’ll be paying $3,500 and some closing costs. Do you have $5,000? Let’s face it. Borrowing this money is not that difficult, and believe it or not, if you’re smart enough you’ll instantly convert that loan into a continuous cash flow stream.

Many people assume that investing in rental property is impossible when you’re penniless. It’s not. You just have to use the right methods and the turn to the right people to help you get started in this business. Here are some tips to invest without using personal money.

Use Hard Money

Hard money is usually obtained from businesses or private people. They’re used in real estate investments. In spite of numerous changes in styles and terms, the following characteristics define hard money investments:

  • Derived from the value of the real estate
  • High Loan “points”
  • Accepting properties in poor conditions
  • Temporary (from 6 to 36 months)
  • High Interest (from 8 to 15%)
  • Fast funding abilities
  • No income verification
  • No credit references required

Unless you are totally desperate, Hard Money is better for people who invest in real estate, buy it just to sell quickly.

Use your Home Equity

If you already own your home, you can pull the equity out to buy investment property. Use a home equity loan or a line of credit (with a fixed interest, though it is higher). Believe it or not, getting this money is cheap and convenient when you’re penniless. In some cases, you may also deduct the tax interests; check CPA for further information.

Build a business partnership with a loved one

Are you the business type of individual? Do you have drive and passion but no money? Then you should pitch an idea to a loved one and build a partnership. Pick someone who can help you financially. Surprisingly, there are so many people out there with lots of money but with no entrepreneurial spirit. Some don’t even have time for a new business, so if you can find someone who can trust you with their money, invest in rental properties and build a solid business.


When it comes to investing in real estate, many people talk about wholesaling as a sensible way of making money without investing a lot. In spite of so much publicity, wholesaling is not about making a fortune with no money. The truth is investors have one big problem with wholesaling: it is incredibly easy to give up. A lot of people who try their luck in this domain don’t make any money.

It looks like something so easy to do, but when things get tough people quit. Let’s get one thing clear: wholesaling is like any other job; better yet, it’s a self-employed business with great benefits. As an investor, you get to work flexible hours and you can reap benefits only if you are committed. Without dedication and motivation you won’t make it. Most wholesalers don’t realize that this “job” is a lot more complex than meets the eye.

The “lease-option sandwich”

This method is widely used by real estate investors who want to get rich without having to deal with money or loans. A lease option is also known as a lease-purchase (the strategy also goes by the name “rent to own”). It is a transaction split in two legal agreements: lease and option.

Basically, a sandwich lease implies two leases with an investor midway. The investor wants to be able to buy the property for a reduced price when the lease period ends, and for that to happen he will find a tenant willing to but the home but can’t because of lack of cash or low credit score. There are many people willing to accept this deal because it allows them to buy without having to improve their credit or place a down-payment.

Are looking to invest in rental property but you don’t have money? No problem; there are sensible ways to do that, as long as you can spare some time to get informed.

About the Author

Davis Miller is an experienced writer with interest in small business, technology, and gadgets. He has written several high quality articles at many websites. He spends his free time in reading books and watching movies.