Real estate investing can be a very promising and lucrative career for anyone willing to make the investment. Be that as it may, we know that purchasing real estate is going to cost you some serious cash. While you may not be sitting around on a nest egg or large sum of cash to invest right away, there are other options to funding your first investment. I’ll warn you, it’s going to take a mix of creativity, resourcefulness, and industry experience, but it can be done. Below are six strategies you might want to give a try:
1. Crowdfunding – For all the millennials out there, you’re likely familiar with the concept of crowdfunding. Simply put, it is the process of asking for money from a small group of people via the internet. There are platforms such as https://diversyfund.com by which you can create an account for both investing and financing. Within the account you would provide information on what it is you’re trying to do and what your target earnings are. Interested parties would then donate to you and the money is available to fund your first investment.
2. Home Equity – Are you already a home owner? If so you can take out equity on your current home to fund a real estate property. You’ll need to take out a Home Equity Line of Credit or a Home Equity Loan. While they both have their pros and cons, it can get you the upfront funds you need to secure your new property.
3. Work with a Partner – If you have the drive and motivation to invest in real estate, but simply lack the financial resources you can consider working with a partner. By networking within the real estate industry you may be able to find people who are willing to foot the bill into your investment. If you’re going to take this route, remember to put everything in writing so there are no discrepancies later on.
4. Raise Private Funds – Did you know there were a lot of wealthy people out there looking for opportunities to grow their money? You may be able to find individuals who invest in other things that are looking to increase their earnings. Offering somewhere between 12-20% return on their investment is a great way to win them over.
5. Consider Leasing – There is a way that you can invest in a property without actually having to purchase it. A lease-option is when you sign a long term lease agreement with the homeowners with an option to buy the property in the future. This contract would keep the owners from legally selling the property until your option to buy period has passed. You can then rent the property out to accumulate enough cash flow and then purchase the home once you have enough.
6. Mix it Up – There is always more than one way to skin a cat, and therefore if you liked all of these options you can always mix and match them to raise the most funds. For instance you might consider crowdfunding while also going into a lease with the option to purchase. The money you generate from renting out the property and crowdfunding can then be put towards purchasing the unit altogether.
As you can see, there are plenty of ways to invest in real estate without having to have a cent to your name. So don’t let limited funds keep you from growing your income and capitalizing on your future. Before implementing any of these strategies, be sure do your due diligence by conducting research on each method and determining which will have the best financial outcome for you in the long run. If you’re having trouble deciding, try talking with a fellow real estate investor who may have experience and know which route is best to take.