Do you wish to buy commercial real estate, but you are stagnant due to a lack of funds? Don’t think, just dive into the commercial real estate market. You will find an unlimited amount of cash available and endless sources for borrowing it. There is no such thing as no money in commercial real estate. In fact, there is so much money that you can own a commercial property worth millions without even spending a single penny from your pocket. Commercial real estate Corpus Christi can help you in making millions with no out-of-pocket expenses. Find such commercial real estate on commercial properties listings.
Commercial real estate is owned or leased for running businesses. Also, any residential property that has more than five individual units is considered commercial, e.g., investing in an entire apartment building or a group of homes. Commercial real estate investment has the potential for big gains. It is an ideal source of earning a consistent and reliable passive income. Moreover, you can make bucks even with empty pockets if you can recognize, understand, and take advantage of other people’s money. Even multi-millionaires invest in real estate by using other people’s money and thus, keep their money free for other investment opportunities. For new investors and financially strapped investors, investing in real estate with no money is an attractive way of making income. Consult realtors in Corpus Christi, TX, for expert advice.
Now, the question that arises is how do you start investing in real estate with No Money? Here are a few options that will help you to invest in commercial real estate without having the capital to buy it.
Seller Financing
Seller financing is a good option for buyers with no money. As the name sounds, seller financing means that instead of a bank, the seller himself will finance you to acquire the property. Here the seller will hold the property until you make the loan payments to him. But keep in mind that since the seller agrees on a 0% down payment, the rate of interest, as well as the purchase price, is usually higher than the market rate. Seller financing is usually for a period of 5 to 7 years. After this period, the loan amount will be due and need to be paid off in full. The only pitch involved in seller financing is that the seller can always foreclose on you and take the property back at any time.
Subordination
Subordination, also known as creative financing, is almost similar to seller financing. Here the seller takes out a second mortgage on the property to help the purchaser in raising the required funds. Here the only amount you spend from your pocket will be the down payment. Use the subordinate option for a short period and pay off the second mortgage from the money generated from the commercial property. In this way, you can own money-generating property with none of your own money.
Take over the existing mortgage (Subject to)
Another similar option is that when the seller is in a distressed position, you can take over the seller’s existing mortgage. In such a case, you can own a commercial property by using the seller’s existing finance and just pay a part of the purchase price. In other words, you pay off the seller’s monthly mortgage installment amount, and in return, the seller hands you the title to the property. If you think of using this option, make sure to read the loan documents carefully. But if the existing loan has a due-on-sale clause, then the new buyer will not be permitted to assume the mortgage.
Using other people’s money
You can also buy a commercial property by finding an investor or investors who will provide you the required funds. The investor can either be a friend, a family member, or a business acquaintance. The investor will provide you the required funds in return for a certain percentage return or ownership or both. In the beginning, you will have to share a huge amount of profit with the investors, and later as you get experienced, you can keep more profits for yourself. But using this method, you should also add a buying strategy and an exit strategy. This will give an idea to the investor as to how long you will use their money and the return they can expect.
Real estate crowdfunding
You can also use the online real estate crowdfunding option to buy a commercial property. With this option, you can buy a property with less knowledge, less work, less money, and less risk. Real estate crowdfunding is a simple way of raising money for real estate investment. A pool of small investors contributes small amounts to fund big projects. The minimum investment amount is around 1000 dollars.
The process of raising money is conducted via an online crowdfunding platform. The crowdfunding platform is used by large real estate developers who use the funds of small investors to finance a big project. In return, the small investors own a stake of the real estate asset and get a part of the profit. (as sales value or rental income increases, your income increases).
Thus, small investors get an opportunity to participate in high-income and highly sophisticated real estate projects. However, you need to perform due diligence in investing in a specific property on any crowdfunding platform, and only accredited investors can be a part of real estate crowdfunding.
Lease with option to buy
Under the lease with the option to buy, the buyer initially leases the property and then purchases the property at a predetermined price during the term of the lease. The buyer usually pays a higher lease amount above the market value. This excess amount is credited towards the purchase price. At the end of the lease term, if the renter decides to buy the property, then he only has to pay the remaining purchase amount. If the renter chooses not to buy the property, then the seller can keep the excess amount paid by the renter.
Real estate investment trusts
A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate. Similar to mutual funds, REITs provide an opportunity to invest in real estate assets. They pool the money of numerous investors to finance real estate and then lease spaces, collect rent and thus generate income. The investors, in turn, earn dividends from real estate investments without buying, managing, or financing any property themselves. According to the law, REITs must pay 90% of their earnings in the form of dividends. Also, you need not be an accredited investor to invest in a REIT. REITs invest in different commercial real estates such as office buildings, warehouses, industrial space, retail centers, hotels, medical facilities, data centers, and cell towers. You can purchase shares of REITs on the stock market through any discount or full-service broker. Real estate corpus Christi helps in managing such REITs’ commercial real estate.
Conclusion
Investing in commercial real estate with no money out of your pocket is absolutely possible. But you need courage, expertise, and a little extra effort to make it possible. Avoid real estate investing mistakes and make profits. Follow the above tried and tested recipe to ensure success. If you don’t think that you can do a no-money-down deal, then you can’t.
