Many people think that the lack of credit or cash puts buying residential investment properties out of reach for them. This is simply not true.
You can invest in residential real investment properties, even if you have zero credit and zero cash – and don’t even have a job.
Real estate is actually one of the easier things to buy, if you have no cash, credit, or job. That’s because real estate is typically seen as an appreciating asset. Unlike a car which depreciates in value the minute you drive it off the lot, real estate will generally go up in value between the time you purchase it, and the time you sell, provided that you hold it long enough.
Another feature of real estate that makes it easier to buy than other assets, is the fact that most of its value tends to lie in the land itself. And it’s hard for a purchaser to destroy the value in the land. Unlike a car which can be driven into a tree, or driven out of state, the land is not likely to be diminished in value significantly by anything a purchaser may do.
So vendors of real estate are more willing to overlook the lack of credit or cash, than say car sellers would be. They know that the value in the property is unlikely to be diminished too much by anything the purchaser does, and will likely rise over time in any event.
Notice I said, “vendors of real estate,” rather than lenders, such as banks or mortgage companies. Banks and mortgage companies will usually demand at least some cash down, and some credit history before lending money on residential investment properties.
But the owners of these properties may not be so picky.
Because residential investment properties are often difficult to sell. They require hands-on management, dealing with tenants and repairs, and are more in the nature of a business than a passive investment.
Many people with good jobs and good credit, who will happily go into significant debt to buy an impressive house for themselves, are reluctant to invest in something that requires so much work and commitment, and offers little by way of status, or immediate gratification.
So sellers of residential investment properties often find buyers scarce. If they are persuaded that you are a responsible individual with the skills and commitment to take care of the property, and send them a check every month, they are often willing to take a chance on you and carry the mortgage themselves. Often with little or no money down.
And the private mortgagee (the mortgagee is the one lending, and the mortgagor-you in this case – is the one borrowing)is free to lend to you without considering your employment, or credit history. He has no one to answer to save himself.
You may find too, that you are able to get a mortgage rate that compares favorably to the one you would get from the bank, depending on the sellers need to find someone to take over the property.
It’s possible for you to buy residential investment properties without credit, cash, or even a job. Just look for a seller who is willing to carry the mortgage himself.
Real estate represents an opportunity for everyone – regardless of cash, credit, or employment – who is willing to use their initiative, and substitute creativity and elbow grease, for down payments and bank financing. You really can buy residential investment properties without credit, cash – or even a job.