How to Buy Commercial Property with No Money

Don’t have money but want to invest in commercial real estate?

You actually still have options.

That’s how I got my start – I bought my first office building without any money out of pocket.

And it was the best thing I could have ever done for myself.

So, if you’re looking to learn how to buy commercial property with no money, here’s your guide.

Get Creative with Your Deals

Do you think out of the box when you look at deals?

Or do you simply go by the books?

The best real estate deals you’ll ever find will often come from when you’re thinking creatively.

You Don’t Have to Spend Your Money

If you’re just starting your investing journey, money is probably tight.

So, don’t spend your money on commercial properties! Use someone else’s.

Raising capital from investors isn’t quite as hard as it’s often made out to be.

It’s not some ancient mystery.

Many investors don’t have the time to go find deal after deal, which is why they’re willing to place capital with operators who do find the deals.

Good Deals + Trustworthy Operators = Investment Opportunity.

No Money Options

So, let’s explore other ways to invest in real estate without spending your money.

Here are my 5 favorite strategies for buying real estate with no money out of pocket.

1. Get Your Real Estate License

This strategy is my favorite and how I bought my first building.

Study the materials, take the test, get your real estate license, and start finding deals.

While you’re out looking for deals, let your network know that you’re interested in bringing investors into the deals that you’re finding.

You’ll quickly build up a list of interested parties that will want to see your offerings.

Negotiate Your Commissions

Now, here’s the best part: since you have your real estate license, you can actually negotiate to get paid a commission on acquiring the asset.

After all – the seller would pay that to any other real estate agent if they brought a buyer.

That 3% commission becomes 15% equity if your lender requires you to put down 20%.

And you’re not actually coming out of pocket to pay for the investment. You really just have your time and energy invested into the deal.

Boom.

2. Lease with Option to Buy (or Rent to Own)

Is the property currently vacant?

If so, you could approach the landlord with a lease to purchase option.

You’ll lease the property from the landlord and operate your business or sublease to other tenants in order to make the payments.

This lease can last for as long as you and the owner desire and the portion of the rent payments that apply to the purchase price will also vary on your negotiations.

Your monthly payments can go towards your purchase of the building, relieving you from having to fork over a large down payment to acquire the property.

3. Subject To

If the seller has existing financing in place and is in a distressed situation, you could purchase the property subject to the current mortgage.

Essentially, you’re assuming the financing that is already on the property and letting the owner walk away.

If you’re considering this method, you’ll certainly want to review the loan documents to be sure that you agree with the original terms and rates.

Not all properties can be acquired this way, as some mortgages can have “due-on-sale” clauses that trigger the repayment of the debt upon a transfer of ownership.

4. Seller Financing

Ask if the seller is willing to carry the debt on the property when you buy it.

Instead of having to go through rigorous lender approvals, you may be able to make your monthly payments to the property owner, instead.

After a few years, the seller’s financing may balloon and you’ll have to refinance to pay them off or they could carry the debt for the life of the property – again, it just comes down to how you negotiate the deal.

So, why would a seller finance the project?

There are actually a few good reasons:

• They want to avoid tax obligations from a sale

• They enjoy having the monthly income

• They believe in you and want to help you out

• This strategy could help them get rid of the property faster

• Their returns could be more attractive over the long run

• And so much more

5. Seller Pays the Down Payment

Want to get really creative?

Ask the seller if they’d be willing to pay your down payment for you.

In order to structure a deal like this one, you’ll likely end up paying well above their asking price, but that shouldn’t matter since you won’t have to come out of pocket on the acquisition.

Getting the property to appraise for your new purchase price, however, could be tricky.

Here’s how I would see this deal being structured:

1. Let’s say the seller is asking $500,000 for their property

2. The bank requires you to put down 15% to owner-occupy the space

3. The seller agrees to sell the property for $600k and gives you the down payment of $90k

4. The seller makes an extra $10k for getting creative, you get the property with no money down

Sounds like a win for both parties!

Keep in mind, your loan will be larger in this scenario, so you will have to make larger monthly payments.

Break the Mold

The most successful real estate investors and developers are also the most creative.

They find ways to make deals happen, regardless of any lack of funds, knowledge, or experience.

So, there you have it on how to buy commercial property with no money.

Get out there and get creative.

About The Author:

Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors as a board member for the Real Estate Investors of Nashville.