If you want to get into real estate investing, multi-family units can have tremendous income potential! But how can you buy multi-family properties with no money? If you don’t have a good amount of savings put away, the process can seem daunting. Many people don’t know that there are ways to get involved, without paying huge costs upfront.
However, in our latest blog, we’ll share with you…
Methods to Buy Multi-Family Properties with No Money in Detroit
Sure getting a traditional mortgage might not work when you want to buy a multi-family building, but there are still ways to borrow to borrow the cash you need.
- Use and FHA Loan to buy a multi-family property. The key here is that you need to occupy one of the units per FHA rules. In most cases, you will need to occupy the property for a year. The income brought in from the other units should be able to pay a most, if not all of your loan. Find a place you like, with tenants you want to share walls with, and begin your venture into real estate investing by using an FHA-insured loan!
- Another option for funding is a private money loan. These are personal loans, between you and another individual. The interest rates tend to be a bit higher, and the loans are usually for a shorter term than a bank loan. However, there are no set “rules” and terms of the loan can be negotiated at any time. This is a great way to get the money you need with the red-tape and hassles of a bank.
By doing some networking, and meeting people in the right circles, you can meet investors you will be able to partner with. Many experienced investors will have the cash, but they no longer want to do the actual work. That’s where you come in. They provide the funding, while you do the legwork. As with other types of funding, all terms can be negotiated.
You can sell and split the profits, split monthly rental income, or even work in an option for you to buy them out after a certain period of time. No matter what you work out, make sure you have everything in writing, even the smallest of details. Make sure you and your partner have a clear understanding of what is expected of each other so you can avoid any issues down the road.
There all sorts of ways you can negotiate with a seller. If the property is run-down, you can work in an “allowance” deliverable at closing, which can be used for repairs, but also towards your downpayment. You will want to be up front and clear about what you are doing being creative is great, but never put yourself in a position where you could be accused of mortgage fraud! Negotiate a “repair allowance” which you will receive at closing. Use this toward down payment
Another creative method would be to acquire the property and have it transferred into your name. The seller and you would set up a contract, allocating a percentage of the profits going forward. You would need to consider what would happen if you sold the property, etc., but this can be a great way to acquire a property from someone who is ready to sell, or who wants to take on a quieter role as far as their investment.
Are you looking to purchase a multi-family property with no money? If so, we can help! Learn about the best method and find the BEST properties in the Detroit area!