How to Invest in Property without Money

Invest in PropertyProperty investment has always been considered auspicious in India. Upper middleclass and middleclass families usually prefer to buy flats and land in their hometowns as a part of their retirement package or as an investment option in case of extra income. As the Indian economy improves, investment in real estate has seen a steady surge, increasing from 25 percent to about 45 percent in 2013. However, times have changed. Earlier, the bulk of investors were from the commercial sector with a small minority of first-time property owners forming the rest. Now, property purchases are rapidly taking the form of investments with buyers seeking to profit rapidly from purchases in the form of rents or immediate flips. For commercial and private buyers, the market is great with several new projects located in upcoming second-tier towns all over the country. What has changed is the actual investment process, states Real Estate In Your Twenties. Formerly, buyers preferred to take loans to buy their properties for themselves, but now, commercial and private buyers prefer to invest in property without using their own money.


Buying Indian property is subject to several rules, states Invest Four More. For example, the most commonly quoted rule by the Reserve Bank of India states that property loans will pay for up to 80 percent of the property price. The buyer has to pony up the rest in the form of an advance to ensure financial fluidity. However, now buyers invest in property as a hold option. They wait for the property to appreciate in value and then resell it again at a profit. In this case, they do not want to shell out 20 percent of the cost price as it leads to an upfront payment. Buyers have found ways to circumvent this upfront payment process and they use ‘no-upfront-payment’ deals to finance their property purchases. If you are new to the property investment market, here are a few ways by which you can buy property by not investing money up front.

Use the Equity You Already Have in Your Own Home

As a property owner, you already own your home outright. In this case, you may have paid a fraction of the loan and you own that much of your property. You can leverage this equity of take a loan on your existing property to buy your new home. Once this loan is approved, you can use this money to pay the 20 percent upfront for the new property, renovate it, and then flip it to resell it to a new seller for a profit. The best way to make this work is by flipping or reselling the property as soon as possible.

Buy From Friends and Family

Distress sales are very common in India. Families or people who want to relocate or want immediate cash are more than willing to sell their property at an affordable rate. For example, if the property is priced at about Rs 22, 00,000, you can negotiate a lower price of Rs 19, 00,000. Instead of paying cash for the deal, immediately look for another buyer while renovating the home. Then resell the property for a higher rate of Rs 25, 00,000. You get an immediate profit of Rs 5, 00,000 and there is no need to pay anything upfront as well. You can even choose to rent the property. The renter will pay a 20 percent security deposit on the lease and you can use this payment as an advance. The remaining payment can be financed as a mortgage as a lease.

Rent to Buy Options

This option works very well if you are planning to buy a rented property, states Legalzoom. Under the terms of this lease/buy option agreement, the buyer and seller can negotiate an amount that has to be paid at regular intervals as a form of payment for the property. This agreement allows the leaser to stay in the property while gradually purchasing the property over a period of time. Usually, a portion of the payments is credited towards the purchase price while the remainder acts as a rental payment for residency rights.

As you can see, it is easy to buy properties with no money up front. A word of caution, though: you should try this method of property investment only if you are well versed with the Indian property market. Be very cautious while choosing the property for investment. For example, reliable builders like the Unitech Group Properties are well known for their strict adherence to building schedules and you will get your property on time. However, if you invest with an unknown builder, there is a chance that the deal will fall through due to various reasons, leaving you stuck with the bills. Research the loan process, the lenders, the property you are buying, and flip the property as quickly as possible to ensure you are protected.

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