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9 Ways To Get Into Property With No Money
Investing in property is one of the most appealing options for securing your financial future but not enough money upfront is one of the main reasons people put off their property investment dreams.
This is why we’ve written an all-new blog to help you get started with your property investment strategy, whatever your budget is. We ranked them from cheapest to most expensive to make it easier.
1. Keep your head in the game.
Choosing the right mindset is the easiest, cheapest and fastest way to get started. Despite the fact that it is free, it is crucial to the success of property investments.
To be successful, you must work hard, be ready for research, and be resilient.
You can handle any investment strategy and whether any market storm if you possess these qualities. When they don’t develop these key qualities, even the largest investors won’t last long.
2. Let a lodger stay with you
You can actually SAVE money by investing in this manner as it is one of the cheapest ways to buy real estate.
Rent a Room allows you to earn up to £625 without paying any tax on those earnings – a great way to set aside money for your rental business or to invest in a course, and to get used to tenant needs.
3. Buy a REIT.
Here you’re starting to invest real money, but you’re not quite ready to fund your first development.
In real estate investment trusts (REITs), shares in residential and commercial property options are gathered into a portfolio.
Usually, they offer a high income and low risk, since REITs share 90% of their rental profit with their shareholders and are secured against long-term leases.
4. Lease options for properties
Low upfront costs make property lease options relatively untapped investments. A property lease option allows you to rent out a property like the apartments near Augusta without purchasing it.
An upfront payment of as little as £1 is required for the process to be legal – you agree on a monthly payment to the owner, which is usually set at the amount they need to cover their costs and no more, set the length of the agreement, and then decide on a purchase price if you wish to own the property outright.
With a tiny investment upfront, you can give yourself the benefits of a solid rental income without having to worry about a mortgage – and if the price increases beyond your agreed purchase price, you will have gained instant equity.
Conversely, these properties are hard to find, because property lease options offer little to homeowners.
Search in areas with high negative equity – which may not appeal to you for obvious reasons – or run ads targeting people who need to move ASAP, such as divorcees and relocators.
5. Using peer-to-peer lending.
A peer-to-peer lending platform like Zopa will handle the transaction process for you instead of a bank, and allows you to invest directly with another person or company.
Because the banks don’t take their cut if you do it right, your return on investment can increase dramatically. Peer-to-peer property investment allows you to have a liquid asset that is rare in property, and the interest rate is generally much higher than the bottom scraping interest rate on cash in the bank.
If you want to invest in peer-to-peer lending with an individual, be aware that these types of loans are usually unsecured – meaning you won’t get your money back if the borrower defaults.
You should do your research to double-check that peer-to-peer business lending is steady when you invest in peer-to-peer business lending. This is why you have to secure your investment with business assets and property.
When using property peer-to-peer lending, which allows developers to do short term refurbs or quick projects, it is also secured by the property.
Despite the risks – say, for example, that the development comes to a halt – being secured against the property offers good safety for your money, since your investments may be recouped from the sale.
6. Home equity crowdfunding
Property crowdfunding and peer-to-peer lending are frequently confused by budding property investors. However, they are very different methods of investing.
Property crowdfunding is a method of pooling investors’ money so that everyone has a small share of the property. A significant difference between peer-to-peer lending and property crowdfunding is that peer-to-peer lending puts you in the position of a mortgage provider, while property crowdfunding gives you equity rights.
In contrast to peer-to-peer loans, you’ll need to stick with your property crowdfunding investment long-term in order to see real returns. There are two types of property investments.
First, you can invest in property developments, in which each investor receives a share of the gains from the development’s sale. Investing in these can produce higher returns faster, but they are considered riskier.
Another option is to invest in buy to let property crowdfunding, which works much like any other buy to let strategy, acquiring rental yields over time and sharing them among investors.
7. Joined ventures
We love joint ventures, as you probably already know. Think of joint ventures as property crowdfunding on a smaller scale, between two or more companies that each have something to offer the other.
One will typically bring more cash; the other will bring non-financial value, such as access to key growth markets or a great marketing strategy.
Due to their short-term nature, they are often preferred by property investors as they start their business because they provide them with security, as well as a way to develop great business partnerships and property projects without needing a lot of money.
This method can’t be used at the beginning of your career, however, since joint venture partners will always want to see evidence of your past success in property investment.
8. Invest your own money.
It may not be the most financially costly strategy, but if something goes wrong, it is definitely one of the most costly in other ways.
This is a strategy you should only use if you are absolutely certain you can handle any blips in your property investment journey, otherwise you might end up seeing the worst and having to move out.
9. Buy and flip UMVs
Flipping properties at a discount is one of the most popular property investment strategies, and because it is depicted so glamorously, it is also one of the easiest methods to get wrong if you don’t do your research.
Look for bargains at auctions and off-market properties, such as repossessed houses or properties from landlords, and then use bridging loans to secure financing without getting on the wrong side of mortgage brokers.
In addition to generating high capital gains when done right, this strategy is also notorious for its hidden costs. In the event that you don’t properly evaluate potential refurbishment costs, you may end up paying for unavoidable expenses like electrical repairs.
That’s it, 9 ways to get started in property investing without spending any money. Do you have a favorite?