4 “No Money” Ways to Invest In Real Estate

Interested in investing in real estate and reaping the benefits of passive income, but you’re afraid you have no money? There are creative ways to acquire investment properties without necessarily having the cash in your bank account.

When I started real estate investing and closed on my first real estate investment property, I waited to hear back from the bank on how much I needed to bring. My banker works with numerous investors, so I trusted she knew what she was doing. When I showed up at the bank, I just signed papers and never had to write a check.

I was able to make this “no money” purchase through the power leverage! Specifically, I could leverage the equity in my primary residence to acquire my first rental property.

4 Ways To Invest In Real Estate With “No Money.”

The most significant barrier that prevents potential real estate investors from investing in real estate is the lack of capital. People think you need a lot of cash to acquire rental properties.

Though that may be true, it doesn’t necessarily have to be your money. Seasoned investors leverage other people’s money and pay it back (interest included) through the profits generated by the investment property.

Here are four ways investors invest with “no money”:

  • Hard Money
  • Private Money
  • Business Line Of Credit

Hard Money

Hard money is a type of loan provided by an individual or a company. However, they operate a little differently than a bank.

A bank typically checks a person’s credit score and employment to see if they qualify for a loan. On the other hand, a hard money lender does not check for those things. Instead, a hard money lender values the quality of the deal more than the borrower’s employment history.

Hard money loans last for a shorter term than a traditional loan, such as 6-12 months, and have higher interest ranging from 12%-15%! These loans work best for house flippers planning to rehab a real estate property and quickly put it up for sale.

For example, a house flipper found a distressed property being sold for $50,000 that needed about $25,000 to be fully renovated. The after-repair value (ARV) is estimated to be $150,000.

The house flipper can borrow $75,000 from a hard money lender and pay back the loan through the sale. With “no money,” the house flipper was able to make a profit!

Another benefit of hard money is that it can allow a property to be closed in a matter of days rather than weeks. For example, traditional lenders usually hire an appraisal to justify financing. The timing of the loan now depends on the availability of the appraiser.

Hard money lenders understand real estate and will confidently support great deals!

You can typically find them by networking with other investors. An excellent place to start is attending a local real estate group.

Private Money

Private money is another “no money” strategy very similar to hard money. However, hard money lenders usually lend from their businesses. In comparison, private money lenders are nonprofessionals who are usually friends or family. They usually can tap into their 401k or other retirement accounts to lend money.

Also, hard money lenders usually charge high interest rates. Private money loans have much lower rates and are even negotiable. The term also has the flexibility to be longer compared to a term on a hard money loan.

In this stage of my real estate investing career, I don’t finance my deals using hard money or private money. However, if I wanted to quickly scale my real estate portfolio, financing through these options seems necessary.

I am open to the idea, but I am hesitant because I’m not comfortable mixing money with friends and family. Therefore, I recommend that anyone who wants to use private money create a legal document clearly stating all the terms between all individuals.


Otherwise known as home equity loans, a Home Equity Line of Credit (HELOC) doesn’t disperse an entire amount like a loan. Instead, it’s a readily available amount that can be borrowed and paid back.

A HELOC is similar to a credit card where a borrower pays monthly interest payments on the amount borrowed.

For example, a real estate investor can use a HELOC of $50,000 towards a down payment on a house. This amount includes rehab expenses as well as the actual mortgage. The investor can then pay back the balance through a property sale or the cash flow generated from a rental property.

The amount of the HELOC is based on a percentage of a person’s home equity. A house’s equity is the market value of the house minus the balance of the mortgage.

For example, the market value (purchase price) of a house is $175,000, and the mortgage loan balance of the house is $100,00. Therefore, the equity a person has in the place is $75,000, which they can access via a refinance! The more significant the difference between the market value and the mortgage loan, the greater a person’s equity.

The percentage used to determine how much can be borrowed is called the loan-to-value (LTV). Usually, LTV ranges from 75% to 80%. For example, an LTV of 80% with a home equity of $100,000 with yield a balance of $80,000 ($100,000 x 80%).

The interest rate on a HELOC is variable, which means it can change from month to month. Also, the time frame on when the balance is to be paid back varies between lenders.

If you’re looking for alternative ways to tap into your home equity, check out this Hometap Review.

Business Line of Credit

A Business Line Of Credit (LOC) is very similar to a HELOC because the available balance can be based upon someone’s home equity. This is the primary way I make down payments on my investment properties!

However, a Business LOC can also use other assets, such as stocks and cash. For example, an investor has $100,000 equity in their primary residence. With a 75% LTV, the investor can get LOC with a balance of $75,000 ($100,000 x 75%).

Furthermore, the investor also has $50,000 in stocks. The lender would then use the stocks as collateral and increase the LOC lending balance by $50,000. Therefore, the investor now has a LOC amount of $125,000.

Some lenders will even increase the LOC by how much cash an investor has in their bank account.

It’s important to note that different stock brokerages operate differently. You need to verify first if your account can be pledged as additional collateral. The broker will typically have their own Collateral Pledge Agreement for use.

Ultimately, reach out to a local bank and build a relationship with a banker. A great banker can come up with creative solutions to help finance your deals!

3 Creative “Low Money” Ways To Invest In Real Estate

Other creative strategies investors use to acquire their investment properties may not be “no money” strategies but rather “low money” strategies. Here are some “low money” ways to invest in real estate:

  • Seller Financing
  • House Hacking
  • Wholesaling

Seller Financing

Seller financing is when the seller owning the house acts like a bank.

An investor will still take legal ownership of the house. However, the investor will pay the previous owner instead of making mortgage payments to a traditional bank.

For example, a seller wholly owns their property and wants to sell it for $200,000. With seller financing, an investor can request to make a 5% down payment with a 10% interest rate.

Traditional banks usually require a 20%-25% down payment for investment properties. So, a 5% down payment is a relatively low out-of-pocket expense.

As for the seller, they also benefit. They will receive monthly payments with a 10% interest rate and avoid being taxed on a large lump sum of a sale.

This can be a “win-win” situation for both the buyer and seller. The terms between the two are negotiable that technically a person can buy a house with no money down!

Seller financing can still be accomplished if there is a mortgage on the property. This is what is commonly known as “subject-to.” The legal ownership of the house will transfer to the investor. However, the seller is still “subject to” the loan and is still responsible for making monthly mortgage payments.

Unfortunately, the risk with “subject-to” is that the previous owner could default on their loan, and the lender could take possession of the property. Also, some lenders may have a “due-on-sale” clause, which requires the loan to be fully paid back once sold.

Therefore, the seller financing strategy is ideal for sellers that fully own their property!

House Hacking

House hacking is when an investor purchases a multi-unit property, lives in one of the units, and rents out the other unit(s). When you successfully house hack, the tenants “pay down” the debt service by giving investors rental income while the investor lives rent-free!

This technique is an excellent short term strategy for those wanting to get started in real estate. You can learn all about renting and property management without risking too much capital. Check out my article House Hacking: Live Rent Free” for more details.


Wholesaling is when a person (wholesaler) finds a deal on an investment opportunity and finds an investor interested in purchasing the property. The wholesaler then charges a fee to the investor. The better the deal, the more a wholesaler can charge!

Investors are always looking for deals, especially good ones! Unfortunately, searching for these deals can be very time-consuming, especially if an investor has another full-time job.

Investors are willing to pay a relatively small fee to acquire a great deal. This situation is where a wholesaler can be beneficial.

For example, a wholesaler finds an absentee owner willing to sell their property and has them sign a contract. The wholesaler reaches out to an investor, informing them of the deal. The investor pays for the purchase of the property while the wholesaler collects a fee.


Real estate investing doesn’t have to be a “rich man’s game.”

With the power of leverage, there are multiple ways for a person to invest in real estate with “no money” and become a real estate investor. However, it’s crucial for investors, especially beginners, not to over-leverage themselves.

Real estate is cylindrical. The real estate market will have high moments and low moments. Therefore, it’s essential always to be prepared for those quiet moments. Plus, if you prepare well enough, you can seize on the investment opportunities that will present themselves when the market is low.

Seasoned investors are financially wise when it comes to their money and buying property. They use conservative numbers when buying an investment property or an acre of land, and have enough money in reserves to anticipate long term unforeseeable issues.

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