Property Insight

Guide to invest in real estate with no money or bad credit in 2020

Rapid advancement in all sectors of technology, science and society is making people all around the world to turn their heads towards futuristic strategy and invest in real estate.

According to a report launched by IBEF (India Brand Equity Foundation) in 2019, it is estimated that home prices are set to rise and the number of homes for sale is expected to increase by 1%.

With the emergence of nuclear families and youngsters shifting to an independent lifestyle, the demand for the home is also growing at a fast pace giving birth to significant real estate investing goals even with a bad credit score or no money.

To support this fact, another report in September 2019 stated that Real estate sector in India is expected to reach US$ 1 trillion by 2030 and by 2025, it will contribute 13% of the country’s GDP.

These reports and facts leave no doubt that in the upcoming years investing in real estate is going to be a big hit in the long run and the government of India is extending its complete support to the real estate builders and the complete real estate sector.

But the real question is…


Can you actually invest in real estate with little or no money?

Invest in real estate with little or no money

Well, the good news is that you can still invest in real estate with no money down and pave the way to have a better future in the real estate scenario. 

With a little help you can actually start real estate investing and make great profits in the long run.

A basic advice would be having a little cash reserved at all times and if you are planning to invest you might want to consider saving up some amount of down payment as well.

But, more than hard cash, you will require a lot of planned executions and a fair credit score.

Before starting with the ways to invest in real estate with no money, here’s what you need to know about bad credits and credit scores

What is a bad credit score? 

bad credit score

A bad credit score, in simple words, is someone’s poor status of paying their loans on time which can negatively affect their request of borrowing money from the bank or asking for any loan.

Having a bad credit score limits you from borrowing loan from creditors, asking for credits from hard cash lenders or even applying for finance as the surety of you repaying the loan back on time is low based upon your history

Before categorizing yourself with the bad credit bearers, analyse your credit score with FICO scale…


What is a FICO credit score?

FICO (Fair Isaac, credit scores) is a method of evaluating an individual’s creditworthiness. The lender evaluates the borrower FICO score before extending any credit, If the borrower fails to fall under the category of ‘fair’ or ‘good’, the loan may be denied.


How does a bad credit score affect you?

A bad credit score is going to be your biggest hindrance when you are starting your own business. Having no credit or a bad credit can have major side effects if you are thinking of setting your foot in real estate.

A lower credit score means you’ll most likely pay a higher interest rate on your mortgage that will incur you unnecessary expenditure only because of a bad credit.

You may also be denied by most of the lenders as they don’t want their money to be at risk with someone who has a credit score below 580 on the FICO scale.

On the other hand, if you have a bad credit score may be due to some financial crisis or just the lack of responsibility, you have a chance of improving it as well. 

Here is a walkthrough about becoming a real estate investor with little money and bad credit.


4 effective ways to invest in real estate with no money

When you are planning to start your property investment, more than just a piece of land, you are buying a profitable asset.

If you are looking forward to becoming a successful real estate investor, but you are stuck with money crisis and probably with a bad credit loan score in the current scenario, then we have got you covered.

Invest in real estate with no money

Here are 4 productive and feasible ways that will help you in starting your investment in real estate even if you are down with money.


1. Go for house flipping

Go for house flipping

House flipping is a simple process of buying a deserted property or a house whose condition is not-so-well and working upon it well enough to fetch good profits from the same in the future.

Depending upon the type of work, it may take anywhere from one month to a year 

However odd it may sound; the idea of house flipping is one of the most useful and fast methods. You may also see it as the first step of investing in real estate when you are ‘cash-bound.’


How to rehab a property?

House flipping is also known as Rehab property. You may opt for a total property rehab or a partial property rehab depending upon your (or prospective buyers) requirements.

In a partial property rehab, replacement of kitchen and bathroom spaces is done.

In a total property rehab, you go for complete transformation of the property.

You can sell the renewed property at high rates with interest which can return your initial investment and give you significant profits.


ProTip for House Flipping

If you don’t have enough money to buy a rehab property, then borrowing from hard money lenders will be a better option. Getting hard money will give you three benefits!

  • You won’t have to worry about bad credit score as generally, hard cash lenders are only interested in gaining profits and repayment of borrowed amount on time.
  • When you have sold the property after house flipping, you can earn profits that will also help in increasing your credit score along with repayment of the cash you borrowed.
  • Once you steer clear from the cash-borrowed and cost incurred in house flipping, you can sit back and enjoy the returns from your property that you initially invested in.


2. Find a partner to invest with you in real estate 

Find a partner to invest with you in real estate

The most resourceful business assets are people. You can improve your loan application by letting someone be your partner in investment as the risk will now be borne by two people who are willing to invest in real estate.

This risk-sharing gives the lender a surety of repayment of credit. If you can find someone to pitch in with you in a residential or commercial real estate investing, then it’s a win-win situation for you. 

You must also consider sharing the profits earned to maintain your partner’s interest, in the beginning, depending upon the project. While helping you out with finances, they can even help you in improving your credit score.


How does real estate profit sharing it work? 

You may want to ask for profit sharing to maintain your ally’s interest.

Begin with someone willing to work with you upon investment property (preferably with a good credit score) and start pooling in the resources you collectively have.

Once you have complete assets, you can invest in a property that can prove to be beneficial for you and your partner in the long run.

You can also use their credit score to borrow a loan from the bank. While you are receiving benefits from the invested property, the returns will improve your credit score as well!

Once you sell the property, don’t forget the profit sharing of the earned benefits from the property.


ProTip for Investing in a Partner

Before starting with the process of investment with a partner, you should consider all the legal and financial aspects to avoid any conflicts regarding the legal issues in the future.


3. Look for a co-signer on mortgage

Look for a co-signer on mortgage

Generally, a co-signer is someone who backs you up in times of crisis. Getting a co-signer for investment is similar to opting for a co-signer for a car or apartment. An ideal co-signer is someone with a good credit score and continuous returns via income.

There are several criteria of appointing yourself a co-signer for mortgage. For example, you should go for someone who knows you well and is willing to take the risk.

If you are married, you may ask your spouse for the same, and if you are single, you may ask your parents to sign your loan application.


How is co-signer on mortgage helpful?

Presence of a co-signer makes your loan application easier and assures the lender of repayment. A co-signer shares the responsibility of the borrower and is a good factor when your credit scores aren’t good enough.

Pro Tip for Co-Signer on Mortgage

 Here you can see that a strong credit improves your application, and sufficient income provides a safety buffer for the future in case your life turns an unexpected way!


4. Ask for a Seller financing (if the seller agrees!)

Ask for a Seller financing

In the process of seller financing, the seller signs an agreement with the buyer’s mortgage rather than the buyer applying for a bank mortgage. The buyer repays the loan to the seller for a specific period until the buyer pays off complete loan.

If the buyer applies for a bank mortgage, it requires a good credit score and is at higher risk. On the other hand, in the process of seller financing is relatively more comfortable with low closing costs and the process of down payment and repaying is much more flexible. 

Seller financing can also be called owner financing and is a good option for someone with a bad credit score.


ProTip for Seller Financing

 While opting for seller financing for investment property, you have to be sure about repaying the loan amount in time, and if you fail to do so, it may also affect the seller’s credit score.


You can start investing in real estate with bad credit score now!


Real estate investing is a sure way of gaining better profits even if you have no money down or you don’t want to spend a lot in the first few years.

You can also opt for affordable investment property for sale or use any of the above methods to kick-off your real estate business without buying a property.

If you are looking for someone who can help you with the financial and legal procedures, then Mahima’s advisory services have got you covered. From finding a property in Jaipur up till paying off the complete amount.

Mahima advisory services will be your step-by-step guide in how to invest in a property along with other legal aspects.

Opt for a better option with futuristic goals and start investing in real estate even with no money today!

For better understanding about residential projects, kindly read our blog on Advantages of Open Spaces in a Residential Project

Tanvi Punjabi

Tanvi Punjabi is a prolific content writer and has been creating user engaging content for the last 3 years. She currently works with Mahima Real estate as a writer & blogger and writes unbiased opinions about the real estate. She generally pens down her thoughts about home improvement, property buying, real estate market and tips & tricks. When she is not glued to the laptop, she is found reading books that include fiction & self-improvement.

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