Buy Houses Without Cash Or Credit

Updated April 13, 2024. Say that you want to buy houses, but you don’t have cash or credit. In addition to not having cash or credit, you don’t think you would qualify for a home mortgage. What is the answer? You have read books and videos about investing in real estate. Again, are there any options available to buy houses without cash or credit? The answer is yes! You can be buying houses right now using creative financing without any cash or credit.

Three Ways To Buy Houses

Here are three ways that you can buy houses without cash or credit. All you definitely need is a really motivated seller. If the seller isn’t really motivated, the answer is simple. Wait for the next deal to come up.

The three options to buying houses that we will go over in more depth are: owner financing, subject to, and lease options.

Owner Financing

Owner financing is a transaction in which the property owner finances the purchase directly with the person or entity buying the property, either in whole or in part. This type of arrangement can be advantageous for both the buy and the seller. Basically, it eliminates the costs of a mortgage from a bank. As the real estate investor, ask for $0 down payment, and an interest only payment.

If you have ever purchased a house before, you know that when the house ownership changes hands it seems everyone wants a piece of the pie, so to speak. The mortgage is part of this equation because a part of the mortgage each month always goes to pay down the principal. If you can negotiate an interest only payment with the seller, you will pay down the price of the property more quickly.

Subject To

Subject to means that the investor will offer to take over the original owners payments because the owner was falling behind. Why would anyone agree to leave their name on the loan and let you become the new owner? There is a rule in business that says “you are not your customer.” So you can’t really put yourself in the owner’s shoes. For whatever the reason, the original owner is highly motivated to get rid of their property. The good news is that luckily you are there to creatively solve the issues and problems so the owners can get on with their lives.

You agree to take over the original owners payments. Why would you do this? There are two reasons. One: time is of the essence. You don’t have time to see if you qualify for a mortgage. The owner’s want out now. The second reason: the original owners payments are less than the bank would give to an investor by a few percent points. So use the mortgage that is already in place. Basically, the bank doesn’t care where the money is coming from each month to pay the mortgage. The bank just wants the money each and every month. After you take ownership of the property, then you can start to consider if having your own mortgage makes sense for this property.

Lease Options

Lease options. The buyer investor pays the seller option money for the right to purchase the property at a later date. The buyer and the seller can agree to a purchase price at the inception of the agreement. Perhaps the buyer might agree to pay market value at the time the option is exercised. As a result, owner financing and subject to do not work.

If owner financing doesn’t work because there is already a mortgage on the property, and in addition, subject to doesn’t work because probably they owe too much based on the value of the house. If that is the situation, then a lease option could make the deal work.

Lease Option Agreement Example 

The value of the house or apartment is $150,000. The loan on the property is $140,000. The investor would agree to lease the property for a period of say five years for $1000 a month with the option to purchase the property for $145,000. Then you, the investor, can rent out the property. Keep the original owner’s mortgage in place and just make payments. Check the numbers and make sure you are positive with your cash flow.

Depending on the location of the house, if the area is appreciating, in five years you could exercise your option and purchase the property. However, if the area is depreciating you may be better off deciding to not purchase the property. In this instance you can always try to renegotiate the price of the property to an agreeable value.

No Excuses For Owning Multiple Properties

So there you have it. These are three awesome ways to buy houses without cash or credit! Many real estate investor professionals use these three ways exclusively in their careers. If you are looking to invest in real estate or looking to take real estate investment to the next level, seriously consider the techniques we have just talked about.

I know real estate investors that stick to these three buying techniques and have the profits each month from hundreds of property rental houses that they control. Therefore, if are interested in finding out how they do it, please read my blog on the best three ways to Boost Your Rental Property Cash Flows.

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Finally, if you are interested in Becoming A High-Net Worth Individual, please read my blog and watch the YouTube video by a fancinating guy named Andrew Hendersen, founder of Nomad Capitalist. He believes that the world has changed forever and says it’s time for you to “go where you’re treated best.”

Best wishes to you in achieving your financial freedom sooner!

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Last Updated on April 13, 2024 by Financial Goodness