Fact Or Fiction: Long Term Investing With Someone Elses Money?

I have heard the no money down and invest with someone elses money spiel so many times that I almost did not write this article. So often, it seems like these are just great, attractive tag lines designed to sell a real estate investing course or get you pay for someones connections so that you can make money without spending it. So lets get one thing straight right now: You can make money without spending money, but you cannot make money for free. Every return comes from some type of investment. Once you get settled with that notion, however, the idea of real estate investing for long-term benefits using someone elses money does have some viability. However, you will need to make up for the lack of money in a variety of other ways, mainly work, time and effort.
Now that were on the same page, lets explore how to invest in real estate long term using someone elses money.
In todays economy, there are many, many, many motivated sellers. And on top of this, there are not many buyers who can get traditional financing. This leaves these sellers with only a few conventional options:
1.Wait for a buyer who has a 20 percent down payment and can get financing
2.Wait for a cash buyer
That is about it. And as you can see, both of these options involve waiting, while time is not something that most motivated sellers have an abundance of. So these motivated sellers are forced to consider other options.
Their options are actually better than they probably think, which is good news for you as a real estate investor interested in investing using other peoples money, because you are probably going to have to teach a mini seminar on these options before a seller bites. So remember these options:
1.The seller can seller-finance
This means that they use their money and credit to either keep the existing loan going or get a new one. Generally, the process basically involves the buyer and seller setting a price and an interest rate, then writing up a note. Should the buyer default, then the seller gets the property back after foreclosure and takes a loss on the loan. However, if the buyer pays off the note, then they own the property in the clear just as if they had financed through a bank. Many sellers take this option and then sell the note at a discount, but that is not your problem. If you take this option, then you effectively have financed the house on terms that are determined by you and the seller using the sellers money.

2.The seller can offer you a subject-to transaction
Weve already talked a lot about these, so Ill keep it short. Subject-to transactions allow you to buy a property and hold the deed but keep paying on the existing mortgage. Often a truly motivated seller will take little or no down payment if you will just keep the mortgage alive. No risk to your credit, and no financing on your end.

Note: A lease-option can also enable you to invest with no money down, but you will need to start paying rent and ultimately end up financing the property yourself in most cases.
The last option is just for investors. You can find a partner who has the cash, then do the legwork in the business to earn your keep. Your partner can be a private investor or even local or federal government programs.
In summary, you can often invest in long-term real estate without an outlay of your own money, but you will have to make up for this discount in other ways. Generally, unless you can find a partner, you will also have to start using your own money to keep up the property. So it is possible, but the lines are not as black and white as many people would like you to think.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.