Most investors looking to purchase a property do not go beyond the obvious: make a cash offer and put it under contract. Many find themselves stuck in situations where there is no equity in their home or perhaps they cannot get a hard money loan for whatever reason.

Here’s why this topic is important. When you get into a home that may not have a lot of equity, but still has cash flow, most investors will try to do a short sale, and that may not be the best option.

What happens if the mortgage is current? I know it won’t get the seller behind on payments, so he needs a different strategy.

There are many creative ways to take control of a property.

Distribution of shares where multiple investors own part of the property. This is most common in commercial real estate, but can be used for residential real estate as well.

Donald Trump does not take money out of his pocket when he goes out to buy a big building. Instead, he rounds up investors and offers an equity position in the property.

This is how this works…

In a typical loan situation, the buyer buys a property by borrowing money from a lender. As the property increases in value, only the buyer benefits, but not the lender. If you are looking to borrow a large amount of money, the lender may consider it too risky. In a situation like that, he can offer the lender a position on the equity of the property and partner with them.

This is a more advanced strategy that obviously requires you to talk to your lawyers and other professional advisors.

When you create a joint venture or partnership, it’s important to decide early on what would happen if you owned it. When everyone is selling. How do you get out if you need to get paid sooner than you thought?

These are all questions to ask in your agreements.

So how would this work in residential real estate?

Well, you may have a deal but no money. You could find someone who has money but no time or no deal and offer them an equity position in your deal and form a partnership.

This is one of the best strategies I’ve seen for creatively acquiring real estate without taking money out of your own pockets.