Written by Lewis Ridley
Updated over a week ago
If you’re looking to make some serious money, becoming a property developer is a good path to take. However, the endeavour can take a fair bit of start-up cash, which can put off a lot of people.
This article will cover ways you can get started as a property development little to no money. Let’s get started.
The easiest and quickest way to get into property development with no money is by doing a JV or a joint venture. This is where you use someone else’s money to fund the entire project, and you just oversee it.
The approach is quite simple when you take it on face value. However, it does require a lot of knowledge and experience in the space. You need to be able to build a network of property investors who have a lot of cash or buying power. Something like this is usually build through years of hard work.
If you want to start networking and discovering individuals who have the money to funding your development dreams, you can start small with PIN meetups. These are scheduled events here property investors can mingle.
You should have some projects in mind before you go and be ready to pitch them to investors. If you can show you’re reliable and know what you’re doing, you could have success with this method.
If you have a home already and are looking to develop property, you could get a large sum of money quickly by remortgaging your property and pulling out equity. You could then use this equity to fund the deposit for a lending product.
To state the obvious, you need a home for this work. You’ll also need to make sure the property value is more than the mortgage so you have some equity to actually pull out.
To learn more about remortgaging a property, see our knowledge centre. We also have a guide on how to remortgage your home to fund a second property.
When most people think about loans, they think about scary talks down at their local bank. However, there is another way to get a loan that doesn’t involve lots of roadblocks and hoops to jump through. This includes informal loans.
Typically, this involves getting a loan from a friend or family member. If done right (and if your family member likes you), you could get an interest-free loan. Alternatively, you can offer interest or a portion of the profits from the gross development value once you’ve finished your project.
There is, of course, risk to getting an informal loan. If you don’t make a profit or something goes wrong, not only could your family member or friend lose their money, but you could also lose their respect. Do this at your own risk.
Bridging finance is a unique type of funding product that is primarily used to buy, develop, and refurbish properties. These loans are short term, often lasting around 12 months, and can be taken out in large sums with the lender sometimes even willing to fund the development costs.
Bridging finance not only is flexible but also speedy. You can secure this kind of finance in as little as 24-48 hours. It’s a great option if you’re looking to develop property with no money.
However, there are some caveats. Firstly, the interest rates are higher due to the short-term nature of the loan. Secondly, the loan needs to be secured against something, like a property. This means you may have to own a home to qualify with some lenders.
If you think this finance option is for you, get in touch with a broker to assess your options. To learn more about bridging finance, see our knowledge centre.
Another fairly simple way to get into property development with no money is through finding development deals and projects and offering them to investors who have the money and teams to see them through. This is known as deal sourcing.
If you’re able to find good development opportunities but don’t have the funds, you can sell them to developments for a tasty sum. In some cases, you can sell these deals for as much £5,000.
Of course, there are a few more steps to go through before you can start selling deals to developers. To learn more, check our guide on how to become a deal sourcer. It has everything you need to get started.
Auction finance is a great way to get into property development with no money and grab a property bargain. There are specific types of lenders who specialise in auction finance who will supply the money needed to purchase a property.
Properties usually go for below market value at auction and often need renovating. This provides the perfect environment for someone looking to get started.
A word of warning though: property auctions can be a tough place to start, and you will need a bit of experience to ensure you don’t get burned. Set yourself a budget and even attend some auctions without the intention of bidding so you can see how it works.
Once you’ve got some experience and are clued up more on the process, you can use this finance option to start your development journey.
Some lenders will offer 100% LTV loans. However, in some cases, you may need to offer a deposit to secure the finance for a development.
If this is the case, there are still ways to generate money using property with no money down.
You could start a series of rent-to-rents, lease option agreements, and even try property sourcing with regular residential deals. There are a lot of creative ways to get into development via standard residential property.
To learn more, see our guide on how to start investing in property with no money.
Property development is a lucrative business that can make a ton of money. However, start-up funds can hold people back from jumping in.
With the above options, you should be able to get into developing properties with no money. Although you may need a deposit depending on your circumstances, there are still options available. You just have to be creative.
To learn more about property development, see our knowledge centre.