How Do I Invest in Real Estate With Little Money Down?

Most real estate deals involve the buyer's paying some amount of money to the seller. However, the money the buyer has to come up with does not have to be his own. Various real estate strategies can be used to satisfy a seller in lieu of immediate cash. Real estate option contracts, promissory notes and real estate contract assignments are three popular ways to buy real estate without cash. The balance of the real estate expenses can be financed with credit. 

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Create promissory notes to buy real estate without cash. A certificate of indebtedness could be a loan or promise to pay back the cash.  When the seller requests a down payment or earnest money deposit, pay it in the form of a promissory note. It is not necessary to make the promissory note until after the seller has accepted your offer. Use credit cards, credit lines or home loans to finance the remaining costs of purchasing the property.

Use an option contract to buy real estate without cash. A real estate option contract gives the buyer the option, but not the obligation, to purchase property under the terms of the contract by a specific time. If the buyer does not choose to exercise his option, then the real estate contract will expire. The buyer can sell his rights in the real estate contract to another party for cash. Alternatively, the buyer can schedule a simultaneous closing to purchase the property from the seller and then sell it to a new buyer later on the same day.

Assign your real estate contract to a third party. First, enter into a real estate contract to purchase the property from the seller. Write the term “and/or Assigns” directly behind your name. These three words allow you to easily assign your rights in the contract to an entity or other person who will instead close on the property.

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