How Can I Buy a Property With No Money​?

We know that everyone growing up knows that buying their first property or even multiple properties over their lifetime is a massive achievement, but with house prices rising, we’re definitely noticing it becoming harder for those looking to get on the property ladder. 

Property can be a big investment and take away a lot of your capital… typically. Yet, is there a way where you can buy a property with no money down? The short answer is yes, it is possible, and we’re going to run you through some of the methods it can use in this blog.

If a property is something you either want to invest in or live in, but your upfront capital is not as much as may be required, then follow along—we may have something you like.

How to Buy a Property With No Money (9 Methods)

Some of the following options may not be possible for some of you reading, so that’s why we’ve got 9 different methods for you to choose from, because at least one of them may suit what you’re looking for:

#1 REITs (Real Estate Investment Trusts)

The first and probably most accessible option for most of you reading this blog are REITs, known as real estate investment trusts, which are essentially publicly traded firms that own properties under their management, which you can invest in, similar to how you’d invest into a company on the stock market… but just for property instead.

As the investor, you will make money mainly from either capital gains or dividends as a shareholder of the chosen REIT you decide to invest in. Before investing, you may want to look at the difference between the most common types of REITs that are on the market:

• mREITs (Mortgage REITs) – Your income comes from the interest earned by the trust’s investment in the mortgage loans
• Equity REITs (the most common REIT) – Your income comes from rent collected from properties (paid out to you as dividends) and even potential share price growth if the value of those properties goes up

As an investor, you have to look at these two main types and decide which one you prefer based on your personal goals and do your own research on each type deeply. 

#2 Take in a Lodger

One of the best ways to make an income from a property is by taking in a lodger. Whether you have a home already or you’re renting a property (you will have to consult with your landlord first), you can potentially take in a lodger, meaning that someone else can live in your property and you can charge them rent like a typical tenant.

It’s not always possible to do this if you’re renting so please make sure to confirm this with your landlord, but if you get the go-ahead, take advantage of the government’s Rent-a-Room scheme, which lets you earn up to £7,500 a year tax-free by renting out a furnished room in your home.

Things to note:

• Check the impact it may have on your housing benefits
• Understand the legal obligations that come with this responsibility
• The tax implications if you earn over £7,500 a year
• The overall impact on your finances and whether it’s worth it
• Choosing the right lodger because it could cause big headaches if you don’t

#3 The Rent-to-Own Scheme for Properties

The rent-to-own scheme is a brilliant way to get on the property ladder without an upfront deposit, as it is basically an agreement between you and the current landlord to say that you’ll pay subsidised rent, until you’ve saved for a deposit, in which you then have first dibs on that house you’re living in.

What you need to remember is that these properties are typically 20% lower than typical rent payments, freeing up more capital to save up for a home. Rent now, buy later!

#4 Peer-to-Peer Lending

Peer-to-peer lending is another way you can get into property without actually buying a property yourself. Essentially, you will be lending your money to someone who’s buying a home, usually through an online platform, and in return, you earn interest rather than going through the traditional route of a bank. In this regard, you kind of are the bank. 

You must be careful, though, that:

• The person or company can actually pay you back, guaranteed
• Make sure it’s a trusted, established P2P company (as many have gone bust)
• There is always the risk of late repayment, never mind no repayment
• You might have to pay extra fees on top of the loan’s interest

Make sure you do extensive research and speak to an expert before looking at P2P lending for getting into property. 

#5 You Have Property Lease Options

Property lease options give you the chance to rent out the property for money without even owning it outright. This is essentially a contract that gives you the option to buy outright at the end of the contract, but while you’re in this ‘limbo’, you can rent out this property to someone for more than what you’re paying to the landlord. 

However, you have to remember that these lease options can be hard to come by, as there’ not only a lot of uncertainty for the landlord, but charging someone else more may not be in the agreement. 

#6 A Joint Venture

A joint venture is a very popular option for people to get into property without as much upfront investment because it’s usually two or more people joining resources to buy the property. And sometimes, one person may not even have any cash; their resources are the marketing strategy rather than cash, which one person is likely to have more of.

The downside of this is that people who opt for joint ventures want to see that you’ve succeeded with property already, which can be few and far between with beginners. Thus, you must make sure you have some skin in the property game, whether that be work or your business. 

#7 Property Crowdfunding

Another way you can get into property with little amounts of capital is by property crowdfunding, which is you and a group of investors pool your money together and buy the property, with each of you having a small share in the property. 

But, what are the differences between this and peer-to-peer lending?

#8 Buying Under Market Value (UMV) to Flip

Now, this is one of the best and most popular ways to get into property, but it can certainly go just as much the other way if done wrong. Typically, if you buy an under-market-value property to flip, you’ll be going to property auctions or even off-market properties offered by ex-landlords.

Then, most of the time, you’ll use bridging loans to make sure you get financing on the home and although this can reap some incredible capital gains on paper, you need to make sure you’re doing the calculations on TCO (total cost of ownership) because there are some hidden fees that may heavily impact realised profits.

For example:

• Making home refurbishments
• Paying for repairs and damages
• It’s not just indoor you may have to pay for, there could be some outdoor issues, etc

You get the point; it’s not just the ‘home’ you’re using a bridging loan for; there’ll be some phantom costs.

#9 Using Previous Equity 

Using previous equity from another home may be another way you can get into property without any upfront cash from anywhere other than property, as it’s already equity built up from your home. 

This is a property investment strategy that you need to be absolutely sure of because the downsides could be detrimental, such as losing the property you live in if you can’t afford the repayments.

What Are You Going to Choose?

So, there you have it; there are 9 ways you can buy a property with a lower barrier to entry than traditional property buying. Remember, though, each one of these tips comes with its downsides that should be explored in mass detail before taking that leap. 

If you know property is something you either want to buy or sell in the near future, Liam Gretton is your local estate agent to help you during the process. Yes, you’re going to need an estate agent during the buying and selling process, so why not go with one that is independent, actually has your best interest at heart, and wants you to find the right property for your needs?

Contact us today at hello@liamgretton.co.uk or call 0151 662 0312 if you’re up for a chat on what you can either do with your current home, or what your plans are for buying in the future. We can’t wait to hear from you!