😔 Are you a new investor struggling to get started or scale your portfolio due to a lack of capital?
🤗 Don't worry, you're not alone. Lack of capital is one of the biggest obstacles for new investors, but there are several strategies you can use to bypass this obstacle and get started on your investment journey.
🏫 Seller Financing: One of the most common ways to bypass lack of capital is by utilizing seller financing. Seller financing is a strategy where the seller of a property finances the purchase for the buyer. This can be an excellent option for investors who are struggling to secure financing from traditional lenders. In seller financing, the buyer agrees to pay the seller a certain amount of money each month until the purchase price is paid in full, or the buyer can refinance out and get a long term bank loan to pay off the seller. The terms of the financing agreement are negotiated between the buyer and the seller, and the agreement is usually secured by the property being purchased. Given that all terms are on the table for seller financing, a buyer can negotiate with the seller for a lower (or zero!) down payment for their purchase.
📬 Wholesaling: Another popular strategy for new investors is wholesaling. Wholesaling involves finding distressed properties, putting them under contract, and then selling the contract to another investor for a profit. This allows new investors to generate income without having to put any of their own capital into the deal, aside from the time and cost of securing wholesale leads. Wholesaling requires some expertise in finding great deals and negotiating contracts, but it can be a very profitable strategy for those who master it. Funds derived from wholesaling can then be redirected toward long term buy and hold properties to boost your cashflow.
🤝 Partnerships: Partnering with other investors can be an effective way to buy deals without your own capital. I bought my third four plex with just 6% down because I utilized partners to cover the rest of the purchase. By teaming up with other investors, you can combine your financial resources, expertise, and networks to pursue larger and more profitable deals than you would be able to on your own, you just need to ensure you are bringing enough value (the deal, managing construction, property management, etc) to your partners to make them want to do the deal with you despite you not coming in with a lot of cash.
🏦 Utilizing Flexible Lenders:
There are many lenders in the market that offer flexible financing options that can be more accessible to new investors than traditional bank loans. Regional banks and credit unions, for example, may be more willing to work with new investors and offer more flexible lending terms than large national banks. *FOUR* out of my five deals so far have all required 10% down or less, and that is because I have been using regional banks to secure loans for these properties with low down payment options. Private lenders, such as hard money lenders, can also be a good option for investors who need short-term financing to acquire or renovate a property.
🟢 In conclusion, lack of capital doesn't have to be a barrier to entry in the world of real estate investing. By utilizing strategies such as seller financing, wholesaling, partnerships, and flexible lenders, new investors can overcome this obstacle and build successful portfolios. It's important to remember that each strategy has its own unique risks and rewards, and that finding the right approach will depend on your individual circumstances and goals.
