As we discussed in the previous post, no matter how much money you have or how good your credit is, eventually you’ll hit a brick wall if you try to build your real estate portfolio all on your own.

In other words, you need investing partners so that you can leverage their credit and capital and acquire additional properties.

Last time, we talked about using someone else’s credit.  Today, we’ll discuss how to use someone else’s capital to acquire more properties…

1. Receiving a monetary gift is the simplest means by which you can use someone else’s capital for an investment project.  Using the strict definition of gift, there are no strings attached, and the gift is not taxable to you as income.  However, an individual giver can only give $13,000 per year, per recipient, tax free.  Any one individual who gives you more than $13,000 will be subject to the gift tax, which is paid by the giver (not the giftee).
2. Alternatively, a joint venture or partnership can connect you with someone willing to be a source of funds, either for the down payment or even to pay cash for the entire property.  Arrangements can vary: the title might be in your partner’s name, or it might be in your name.  Either way, the idea is that they bring the cash and you bring the real estate know-how, and then you split the profits.
3. Taking over someone else’s existing loan in exchange for the property uses someone else’s down payment to qualify for the loan.  A “subject to” purchase contract for a property assigns ownership to you, subject to your continuing the payments on the mortgage loan.  In this scenario, the loan may stay in the name of the original owner.  A full loan assumption puts your name on the loan in the place of the original borrower.  You will have to quality based on your credit, but you are still using the other party’s original down payment.

Using someone else’s capital for real estate investing can be done with methods that range from the simple to the sophisticated, and create new avenues to real estate investing opportunities.

What other strategies have you used for leveraging other people’s capital in your investing?

For more information on how you can escape the rat race for good and create lasting, generational wealth with real estate, download my FREE ebook, “How to Find Underpriced Properties: Secrets for Creating Wealth with Real Estate in ANY Economy.”