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Real Estate Investing FAQ – Is There Cash Free Real Estate Investing?
By Tom Dunn | August 30, 2008
This is another in a series of posts answering real estate investing FAQ (frequently asked questions). This time, we’re looking at the concept of investing in property with no cash.
A couple of points at the outset are important to understand. First, no cash doesn’t necessarily mean no cash from any source. Rather, it means no cash of YOUR OWN. That’s an important distinction.
Second, what we’re really talking about here is also known as “no-money-down” investing, a topic which has received lots of attention, and had lots of books and articles written about it. That’s the reason it’s a real estate investing FAQ. I’m not going to try to cover it in detail here… just give you the broad brush strokes.
To answer the question, of course there is such a thing as cash free real estate investing – but it’s not as common or as easy as the gurus would have you believe.
First of all, investing with no cash of your own requires something other than cash, such as equity, or credit, or some other kind of leverage. Other people’s money, be it bank, partner, or third party, typically doesn’t make itself available until there is a darn good reason, like a smoking deal (equity), someone willing to hold paper (credit), or a combination of these and other “leverage” tools.
Think about that word “leverage” for a moment. It comes from the root word “lever,” which is a small tool used to move a great weight. That’s what real estate investing leverage does, controlling big, expensive properties with a loan or mortgage, by using the principles of high equity and good credit.
So you see, you can buy properties with little or no cash, as long as you have some tool for leveraging. If you find a great deal, that’s leverage. If you have excellent credit, that’s leverage too. And, if you have a boatload of cash available, you may not need to use it because just having it can act like a lever as well.
Partners and other entities can provide cash in certain situations, and often they are the best form of leverage for cash free real estate investing. A company like City Capital Corporation, and their Socially Responsible Real Estate Investing Program, can provide a risk-free, hassle-free, cash-free vehicle to leverage multiple real estate deals, and best of all you keep all the profit.
We’ve looked at just a few cash free real estate investing alternatives, and admittedly we’ve only scratched the surface. Stay tuned for more real estate investing FAQ.
Topics: cash free investing, faq | No Comments »