The title of this article may sound a bit misleading, but it is not. You can really buy real estate without a loan. It is perfectly legal, and should become perfectly common if you truly want to invest in multiple properties without the hassle and debt of multiple mortgages. What you need is something called a lease option.
A lease option is a lease to rent the property for a specified period of time, with the option to fully purchase the house after the lease term is up. The lease term can be a full year like many rental agreements are, or maybe even two years.
In the past, lease options were something only those that needed help getting a mortgage would use. Those who were not yet credit-worthy would use the lease option to buy themselves some time before they had to qualify for a traditional mortgage. For example, they may need six more months before a bad credit mark would come off their report, therefore qualifying them for a loan or maybe just a better interest rate. A lease option gave them that time while ensuring the property would still be available to buy. They essentially took the property off the market before it was sold, and without a mortgage.
Now, this same system that was once a crutch of the credit unworthy can be a way for you to invest in real estate, without the initial investment. No money down, no mortgage. And you have the length of the loan to decide whether you want to actually buy the property or not. During that lease period, if the property appreciates, all the better for you. This means more profit for you should you turn around and sell it later. Any real estate professional will tell you that the key to making money in this industry is buying properties where the value will exceed the purchase price. Leasing allows this to happen with no initial cash investment from you.
Peter Vekselman is an acclaimed real estate investing coach, providing real estate investors of all sizes coaching, real estate mentoring, and advice to help them be more successful with their real estate deals and investments. Visit www.coachingbypeter.com
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