How to avoid interest rates in real estate?

Question

Is there any way I can avoid interest rates or will I have to create debt to be profitable in real estate?

Chris Weis · Answer

Our Islamic Finance team here  does Murabaha originations, which are essentially no interest agreements.

Patricio P. · Answer

@Mohamed Hersi I assume you are asking because of the Islamic prohibition against Riba (interest/usury). There are a number for Islamic finance companies that specialize in home co-investing. They range quite a bit from being very similar to a mortgage all the way to a JV where the owner occupant pays market rents on the portion they do not own. There are many companies you can look into such as Guidance Residential, Ameen Housing, Lariba, University Islamic Financial, etc. I'm not sure if any of these provide investment loans, but its worth looking into it.

Other ways you can invest without borrowing money are to do joint ventures where you provide the work and sweat equity while someone else provides the funds and the profits are split at a predetermined rate. Wholesaling requires some money but you can get properties under contract and assign them to someone else in exchange for an assignment fee.

Without being able to take on an interest based loan you will have to get a little creative but there are a lot of options for you and ways to make money in Real Estate.

Jim Pellerin · Answer

There are many ways to get into real estate investing without incurring debt:

1. Wholesaling

2. Lease Options / Rent to Own

3. Birddogging

4. Joint venture partners

Andrew Syrios · Answer

There are some that save to buy, but most will need to incur debt to buy and hold at least (you can obviously wholesale without it). I've known some that focus all their cash flow on paying down that debt so they can have free and clear properties. We just see it as a cost of business. It really just depends on how you want to approach things.

How to avoid interest rates in real estate?

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