Top 3 Ways to Buy Commercial Property Without Your Own Money!

Investing in commercial real estate is an industry in abundance. There is literally an unlimited amount of money available to people who want to borrow it. So much, in fact, that you can literally buy millions of dollars in commercial property without using a dollar of your own money!

Unless you already have millions of dollars at your personal disposal to invest, or are lucky enough to come from a wealthy family, borrowing money is the only way to become a commercial real estate investor. It’s a great way to buy commercial property, even if you already have your own millions, because you don’t have to worry about losing your personal money. In fact, this is how many billionaire commercial real estate investors make their money – by not using their own! If you don’t use it, you will never lose it.

One of the reasons you can borrow money to buy property is because of something called leverage. Simply borrow money against the property, as it is the property that really has the value. This will play an important role in our discussion of buying a property without using your own money.

The first way to buy property without your own money is subordination. Many people consider this way of buying a property as creative financing. In this situation, the current owner takes out a second mortgage on the property to cover the difference in what the buyer (you, the investor) can borrow from a bank or private lender. If you are lucky enough to have a homeowner who will sell the property with no down payment, and he or she subordinates a second mortgage for the difference you owe, then you just bought a property without your own money!

When using this tool, it is a good idea to have the owner only subordinate for a short period of time, such as a year or two, only until he can take the money generated by the commercial property and pay off the second mortgage, leaving the owner free of the property. At this point, the property payment can be made because you will have generated cash through the commercial property. The landlord will really wait for your money to be paid for the property! It happens all the time and everyone comes out happy in the end. You buy your property making money without your own money, and the owner receives payment for the property. This situation may seem the other way around at first, but it works quite well if you find a homeowner who is highly motivated to sell and understands this way of investing.

You should always make sure that the property can support the debt, as you do not want the owner to get into financial trouble with the second mortgage. Some homeowners are tired of this type of investment, as some buyers do not do what they say and problems arise. You want to be an investor of integrity and have a reputation for making things happen the way you and the seller agreed.

Another way to buy a property without your own money is through the owner who frees up a free and clear surface that you, in turn, use to borrow enough money to cover the down payment on the entire piece. This strategy works especially well with raw soil. Basically, you are using a part of the property to buy the entire property. Homeowners may not even be aware of this option, so be sure to mention it or address it in a letter of intent, especially when it comes to many acres of land!

A third way to buy commercial property without using your own money is by using partners. There are seasoned investors, builders and developers who will find the financing for you and basically prepare the deal, if you are willing to do the job. Arrangements can differ a lot, but the partner (s) will basically fund the deal and take a portion of the return it generates, either by exchanging a distressed property or overseeing the development or construction of a specific type of property and making it profitable. Partners can offer a wealth of experience and knowledge so that you can learn more about a specific type of property or the industry itself.

When it comes to commercial real estate, there are many options; Never limit yourself! Be creative and find resources. There is a wealth of information and money available to anyone who is willing to take the time and make a few contacts. This industry is not one of limitations, but of abundance.

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