“The Book on Investing In Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People’s Money” by Brandon Turner is a helpful “greatest hits” style overview of tools to have in a real estate investor’s toolbox, especially for those new to investing. Some of the presented methods can also be a good reminder for more experienced real estate investors about real estate investing’s potential creative financial options.
Turner starts out with broader advice for investors regarding what type of investor they are, what is their appetite for risk, how hard are they willing to work to find great deals, and what are the best scenarios for low money down options. He also warns of the risks, including reduced equity for a sale exit strategy, sometimes higher interest rates, and being knowledgeable about the non-standard tools. From there, he launches into specific strategies.
Owner occupied properties are a classic way to get started in real estate investing, either as a live-in flip or as a landlord in a 1 to 4 unit building (5+ units are considered commercial and they don’t have the same low down payment options as with home owner loans). Some of the best known and most dependable low or no money down owner-occupied conventional loan options include:
- FHA (Federal Housing Administration), where the buyer pays for mortgage insurance in return for getting a loan with a low down payment)
- 203k, where rehab costs are included in the initial loan instead of the buyer needing to pay for the rehab out of pocket after closing
- VA (Veterans Administration), where zero down loans can be obtained, but this is only for military veterans
- USDA (United States Department of Agriculture), available for specified rural locations and income levels
Partnerships are explored next. This includes partnering with people who can provide other value to a real estate transaction (funding, contractor, wholesaler, etc.). The costs, risks, and rewards can be distributed across the various partners based on the value they provide and who brings the deal.
Home equity loans and lines of credit can be a good source of funding “on demand”, if you have a good amount of equity in your personal residence and can fi