- October 31, 2018
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Deciding to purchase commercial investment property is a great way to spend your money! There is, however, a damper put on things if you don’t have the money to invest in the first place. Worry is unnecessary though, as there are certainly many ways to circumvent this little hiccup. Read on to discover some tried and true methods of purchasing investment property without having a large down payment (or in many cases, any down payment at all). Success as an investor in the commercial real estate market is closer than you think!
Work on Your Credit
Before we dive into a whole list of ways you can purchase investment property without money, let’s take a look at the most basic component that will affect your ability to thrive, your credit score! If you’re going into the investment process hoping that nobody is going to look at your personal credit score, I hate to break it to you, but you are very wrong. Your personal credit score is going to be a large determining factor in if you will be able to secure start-up funding, how you are going to be able to do it, and who is going to give it to you. Spend some time cleaning up your personal credit report before trying to embark on the journey of investing in commercial real estate.
The simplest and most effective way (and the only way that could potentially not take into consideration your personal credit score) to purchase investment property is to borrow the money. If you are lucky enough to have a close and trusted friend or family member who is willing to lend you the funds necessary to put a down payment on a property, don’t look a gift horse in the mouth! If you’re wracking your brain trying to think of any rich, distant uncles in your family tree, take a step backwards. Remember that you never know what is available to you unless you ask, so start a little closer to home. You may be pleasantly surprised.
Tap into Your Home Equity
If you already own a property (whether a home or another commercial space), you may be able to use the equity in it to finance another investment! Once the new property has appreciated, you can take the money that you borrowed out of it and put it back from whence it came! While commercial property certainly does fluctuate with the market, it is much more likely to stay consistent, making it a great use of your available funds.
Trade Something of Value
Instead of focusing on what you don’t have (cash), set your sights on what you do have to creatively purchase investment property without money. Personal property such as cars, boats, motor homes, and furniture are all viable substitutes that might be considered by the seller instead of cash!
Transfer the Mortgage
In lieu of offering a cash down payment, consider asking the seller if they are open to allowing you to take over the existing mortgage. This is an especially helpful option to purchase investment property without money if the seller has locked in their mortgage at a low rate that you can take advantage of. Certain loans will have clauses preventing this type of transaction, but again, it never hurts to ask.
Lease to Buy Option
Another possibility to allow you to purchase investment property without money is a lease to buy option. Many sellers (particularly those who are aggressively looking to sell their property) may be willing to negotiate a contract in which you, the buyer, pay a monthly installment where a portion of the money goes towards a predetermined sale price for the space. Some sellers may even allow for the full monthly payment to be put towards the purchase price.
Find a Partner
If all else fails, you still aren’t out of options. Look for investors, friends, or family members who might be willing to partner with you on the investment property. Not only does this help you out financially, but it also absolves you of having to take on 100% of the responsibility for the property. That is a particularly helpful thing if this is your first investment and you need some time to learn the ropes.
Looking to Purchase Investment Property without Money in in the Baton Rouge Area?
If you’re ready to make your investment dreams a reality, now is the time to contact SVN | Graham, Langlois & Legendre, LLC. Our team of dedicated Advisors is here to walk you through the process of successfully finding, financing, and purchasing your first investment property from start to finish. Take a look through our database of available commercial properties today, and contact us to become one step closer to becoming a successful real estate investor.