7 Ways to Invest in Property With No Money

If you’re short on resources but keen to buy to invest, you’ll want to know how to invest in property with no money. Is there such a thing as no money down property investing? Is it possible to buy an investment property in your situation? As it turns out, there’s plenty of ways to invest for people in a position like yours. In this article we’ll explore how to invest in real estate with no money. By the end of it you’ll have a choice of bright ideas to leverage, getting you where you want to be. Here’s how to invest in property with little money. 

 

No Money Down Property Investing

First, the most essential question of all: can you invest in property in the UK with no money down? Yes, you can, when you know the right routes to take and you take them creatively. It’s all about being resourceful and knowledgeable. And it’s well worth the effort bearing in mind the benefits of buying to invest. 

There are plenty of reasons  why investing in property can be beneficial. A property investment makes an excellent member of a balanced, diverse investment portfolio, especially since it tends to perform differently to other assets, moving in response to different market conditions. It’s also relatively stable in the sense that over the longer term property usually goes up. It might go down for a few years in a worst case scenario, but there’s a good chance it’ll ultimately recover and carry on upwards. 

Property isn’t a passive investment. Let it to tenants and it actively generates regular income from rent. But tenants aren’t the only source of cash. You’ll also, as we mentioned, almost certainly make good longer term profits as the property market drives ongoing property price rises.  

There’s more. Depending on where you buy, you might be able to make a quicker profit. Prices can rocket in up-coming areas. It also depends on what you buy. Find a bargain do-upper, do it yourself or use a contractor, and you could add thousands to the value quickly without spending anywhere near as much. 

Next, let’s explore the various ways to invest in real estate with no money down. It’s a creative money-generating thing, and there are all sorts of exciting ways to do it. 

 

Take in a Lodger

Our first expert tip involves taking a lodger. It’s a very low cost way to save money, and there’s a financial incentive worth having. The government’s rent-a-room scheme lets people like you make as much as £7500 a year tax free for renting out furnished accommodation in their home. If you share the income with a partner or someone else, the allowance is halved. 

You can let as much of your home as you want and your tax exemption is automatic if you earn less than £7,500. If you earn more than that you’ll have to complete a tax return to opt in and claim your tax free allowance. If you prefer, you can record your income and expenses on the property pages of your tax return instead of opting into the scheme. 

Who is it for? You can opt in if you’re a resident landlord, whether or not you own your place. You qualify if you run a B&B or a guest house. 

There are a few things to bear in mind. You can’t claim for homes converted into separate flats. When you join the Rent a Room scheme it’ll affect Housing Benefit, depending on how you as the renter are classified. You also won’t qualify for a reduction in your Council Tax.  

 

Real Estate Investment Trust (REIT)

A Real Estate Investment Trust or REIT is simply a company that owns, operates, or finances the purchase of income-generating property. It’s basically a portfolio containing a collection of shares in commercial and residential property options, usually trading on the world’s major stock exchanges. 

REITs invest in anything from apartment blocks to hotels, offices, shops and warehouses. Each investor in a REIT earns dividends without having to finance, operate, or own the property themselves, making REITs a relatively low-risk investment that also gives you a steady income. One thing to bear in mind – there is obviously little or no capital appreciation from a REIT. 

 

Joint Venture

professionals having a meeting

First, what is a property joint venture? A joint venture like this involves two or more people pooling their resources and expertise to buy an investment property. It doesn’t have to be an equal partnership, it depends on how much each of you puts into the pot to buy, develop, or manage the property. It’s common for one party to bring more cash to the deal while others might come with less cash but more expertise, great contacts, a talent for the financial side of life, or be a superb negotiator. 

This is how many property investors grow their business, at least in the early days. A joint venture property purchase is secure, as long as you know for sure you can trust your partners. They offer good security, being short term. It’s a proven way to develop warm, positive mutual business partnerships and create successful property projects on a shoestring.  

 

Rent to Own Properties

person handing pen and paper to other person to sign

Rent to own is a brilliant idea. Some rent-to-own homes come with a clause in the rental agreement to give you the option to buy. Others come with an obligation to buy on your part, after a specified amount of time has passed. 

So you find rent-to-own properties in the places you think people would like to buy or rent. You research how much the potential rent is and how many months you need to pay before you own the property. Then you find a tenant who is willing to pay you a slightly higher rent. You effectively pay the property owner the rent they want, and you keep the rest as profit.

 

Property Lease Options

lady holding little model of a house

There’s also property lease options, also called purchase lease options or PLOs. A Purchase Lease Option is a legal mechanism letting you control a property and get income from it. While you’re not obliged to buy the property in future, you have the right to buy if you want to. 

In practice you can make a tiny payment of as little as £1 up front for the process to be legal. You simply agree to the monthly payment with the owner, the length of the agreement, and the purchase price if you ultimately want to buy it. Then you can manage it and let it to tenants for a profit. 

You invest very little. At a minimum of £1, it’s a lot less than a 25% deposit. You don’t need a mortgage but you make money as if you own the place. If its value goes up beyond the agreed purchase price, when you buy it you enjoy instant equity. If it doesn’t, you hand the property back.

Unfortunately, there is a downside to this. Property lease options are hard to find. You need to find places owned by people in negative equity who need to move because of divorce, a career relocation, a job loss or any number of other reasons. 

 

Property Crowdfunding

two men shaking hands

No money down property investing has also gone digital. Take property crowdfunding, which involves groups of property investors pooling their money so everyone owns a small share. You can leverage the money as a loan to finance a property purchase or development. You raise the money online, it’s reasonably straightforward, and it can be a remarkably quick way to generate the funds you need. 

It’s effectively just like other types of crowdfunding, and it works like this. Pre-negotiated, ready-to-go investment properties get advertised on crowdfunding platforms, where investors are invited to contribute. There’s a very low minimum investment, as low as £10, and while it’s a relatively new way to operate it has been going since 2012. In the past few years it has grown, proving very popular in raising cash for property investment, particularly for small investors. 

Property crowdfunding is different from peer to peer lending, which we’ll look at next. 

 

Peer to Peer Lending

Peer to peer lending or P2P is a kind of direct investment. You simply engage directly with another person or business – usually online – instead of going through a bank. Peer-to-peer real estate lending matches investors with borrowers who want to take out loans for property projects. Your first stop is to explore the various P2P lending platforms, which you can do on a variety of websites including The Crowdspace

It’s interesting to know the interest earned on P2P property lending is higher than it is on cash deposits. Because P2P property loans usually offer fixed returns, investors are protected from the volatility of the stock markets. Like crowdfunding, property-backed P2P lending has become increasingly popular with investors because the loans are secured against real-life bricks and mortar. 

Now you understand the creative ways you can use to succeed at no money down property investing. Knowing how to invest in property with little money means you have a variety of choices, all very different and each suitable for different circumstances. Which suits you best? Once you’re ready to go we have some fantastic places to view on your property search.