Real Estate Investing with little or no Money down

Many people believe that investing in the real estate market today is intangible. With the economy in a bit of a slump, potential investors assume the worst. Last check, real estate sales were only down by about 4%. The new home market not as good right now though. Not that real estate investment comes without risks, because it does. Also, the thought of investing with little or no money, yeah right? However, even with a depressed market investing is possible. Even for a novice, the goal of investing with a profit with no or little money is possible. Here are a few tips:

#1: Pre-planning-You must be willing to commit a lot of time to the efforts. If you don’t have ample time, you may as well forget it. You will want to get a look at your credit report and possibly have a renowned mortgage broker to look it over. You can get a free credit report once a year from any of the three major credit reporting agencies(transunion,experian,equifax). If you plan on buying no money down, you will probably need at least a good credit score. Also, check with real estate agents that deal a lot with investment properties, whether be it rentals,foreclosures, or bank owned properties. Being in real estate for a number of years myself, I know that licensed real estate agents have a vast amount of knowledge in this area. Now if you are still on board with the time and planning commitment, you must next decide the route you would like to invest-flips, rentals, or options.

#2: To finance a flip(buying a property,rehabbing, selling for a profit)-Look for property that doesn’t appear to have major repairs needed(new roof, foundation problems). This is where a home inspector could save you a fortune. Most home inspections are available between $200-$300. If you are handy, you could opt to inspect yourself to save money(I prefer professionals). Here is the key to financing this thing no money down. You get a real estate agent familiar with writing no money down offers. They write the offer more than the asking price. Earnest money is written is as $0 or with a promissory note to be made good at closing. The offer will cover down payment, proposed repairs and closing costs. Usually investment property will require on average 10% down payment, depending on your credit. You must have decent credit to do this 100% no money down. Do the repairs and resale. The same general scenario also works for rental property. In rental property, the mortgage broker can also use the current income as potential income for your loan. This helps if the property is already rented out.

#3: Credit not great, but have some money?-This is where tax,sheriff sales or auctions can be great. Generally, properties are sold for the taxes or liens on them. Depending on the property you could pay pennies on the dollar. This way, you don’t have a loan over your head. However, some money is necessary going this route. Some of these auctions can be sold with loan financing. However, the financing arrangements have to be made ahead of time. Income tax returns are great for these type purchases, you at least have some money to work with.

These are the simplest forms of property investment with little or no money down. I emphasize the fact that it is better to work with licensed real estate agents. Also, if your repair work is going to be done by contractors, do your homework. Make sure they are reputable. If doing the repairs yourself, don’t halfway do them, it will affect resale value on flips. Halfway doing rental repairs could come back to bite you in the behind later. Hence, costing you more expensive repairs later. Whether you’re flipping or renting out, make sure your homework is done. Don’t leave room for errors later. The real estate investment market could be lucrative for you if you work smart and diligent.