How to Invest in Real Estate With Little or No Money and Bad Credit

Investing in real estate has become a steadily growing business. Real estate investors enjoy freelance work which allows for vacation and family time. The more and more the real estate market grows, more real estates are coming into the market. You may be one of these looking into investing!

One of the reasons people are afraid to invest is; money. Another large and terrifying point that deters people from investing in real estate is having a bad credit score. While these fears are understandable, they shouldn’t stop you!

Find a Lender that is Cost Efficient

Loans tend to scare people, but they shouldn’t completely scare you away! There are many reputable lenders out there that work well with buyers and investors. According to, Rick Sharga, “some lenders today offer programs where they will actually pay some or all of the closing costs for the buyer.”

If you are looking to get a loan with little to no money, and bad credit, look into; Freddie Mac’s Home Possible Advantage program. In Freddie Mac’s program offers a 1% down payment! This is great if you do not have a lot of money.

Convince the Seller to Pay the Closing Costs

Although this tactic may sound strange, buyers and sellers alike have paid closing costs before. In order to invest in a home, you need to understand the costs of both buying the property and selling it. If you are selling, attempt to convince the buyer to pay the closing costs. And if you are trying to buy a home, ask the buyer to pay for the closing costs.

Research Government Loans

In order to make the right decision, you must research and look into government loan programs that offer help for individuals with no or bad credit score. There are plenty of options such as; First-Time Homeowner, and FHA.

How to Invest in Real Estate Without Buying Property

According to the latest housing market news on Forbes; last year’s housing market was one for the record books, with the gains partly driven by tightening inventories and exceedingly low mortgage rates. In some pockets of the country, housing prices rose well over 10 percent on average.

But, it’s not only the big coastal cities that are seeing huge growth. A survey from GoBankingRates revealed that many cities with the most growth were inland, including: Buffalo, New York (34.6%), Atlanta, Georgia (24.54%), and Cincinnati, Ohio (20.6%).

Now, here’s the good news. Not only is now still a good time to invest in real estate since more growth is likely on its way, but there are also more ways than ever to invest in housing without dealing with tenants or the other minutiae of landlord work.

Here are some of the best options right now:

1. Invest in real estate ETFs: An exchange-traded fund, also known as an ETF, is a collection of stocks or bonds in a single fund. ETFs are similar to index funds and mutual funds in the fact they come with the same broad diversification and low costs over all.

There are plenty of other ETFs that offer exposure to real estate, too, so make sure to do your research and consider the possibilities.

2. Invest in real estate mutual funds: Just like you can invest in real estate ETFs, you can also invest in real estate mutual funds. A colleague of mine, Taylor Schulte of Define Financial in San Diego, says he swears by a real estate mutual fund known as DFREX. Why? Because its low costs and track record help him feel confident about future returns. In addition to low costs, Schulte says the strategy of DFREX is backed by decades of academic research from Nobel Prize-winning economists.

3. Invest in REITs: Consumers invest in REITs for the same reason they invest in real estate ETFs and mutual funds; they want to invest in real estate without holding physical property. REITs let you do exactly that while also diversifying your holdings based on the type of real estate class each REIT invests in.

Financial advisor Chris Ball of told that he personally invests in REITs for the diversification and for the “non-correlation” with other types of equities. He says he likes the long-term data despite the typical mood swings and ups and downs of the real estate market.

“It also gives me exposure to real estate without having to be a landlord,” he says. Ball also says a lot of his clients agree with that position and invest in REITs as part of their portfolio as a result.

You can find all real estate options from the article on Forbes.

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Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.