A financially independent real-estate investor who had to get creative to afford her first property shares 3 strategies rookie investors can use to get started on a tight budget

• Zeona McIntyre couldn’t always qualify for a mortgage. She had to get creative for her first home purchase.
• She shares strategies rookie investors who don’t have a ton of savings can use to get started.
• Look into private lending, which is how she started, and subject-to financing, she advises.

Zeona McIntyre, a real estate investor, couldn’t always get a mortgage.

She didn’t have any savings to put toward a down payment in her 20s, when she was finishing up a massage therapy program and first became interested in real estate, nor did she have consistent income to show to a mortgage lender.

McIntyre had to get creative for her first home purchase, and she continued to use innovative financing strategies as she built her portfolio.

“The first six or seven properties that I bought, I bought without getting a mortgage myself,” the 37-year-old Colorado-based investor explained to Insider. One of her preferred strategies was to collaborate with another investor: “I would partner with somebody who had a solid W-2 job, we would split the down payment and the furnishings, and they would get the mortgage.”

According to settlement statements obtained by Insider, McIntyre currently owns 12 rental units spread across nine properties and considers herself financially independent because her rental income exceeds her living expenses.

She discussed three strategies that new investors with limited funds can use to get their foot in the door.

1. Private lending

McIntyre financed her first home in this manner: she obtained a private loan rather than going through a traditional mortgage lender.

A traditional mortgage lender will consider factors such as your work history before approving you for a loan to ensure you can afford to make your mortgage payments. They also take into account your credit score, debt-to-income ratio, and down payment amount.

“I just felt like I wouldn’t be able to qualify for a loan at the time,” said McIntyre, whose first home was a $162,000 one-bedroom condo in Boulder. So she approached one of her former landlords, who was also an investor and a private money lender, and requested a loan.

“I practiced my speech in the shower, got my courage up, and went and talked to him,” she explained. “It was surprisingly simple. I must have caught him on a good day with enough money in his bank, because he was very open and eager to assist me. We worked out a private loan, and he didn’t require any proof of my income. He knew I worked in massage and thought I could afford it.”

One of the primary advantages of going private is that you can avoid the strict rules imposed by banks regarding income, assets, and credit score. Loan terms are also more flexible.

“I had put 20% down and he gave me a 5% loan, interest-only,” McIntyre explained. “From what I’d heard from other investors and flippers doing private money, those loans are typically more expensive, like 10%, so I was actually quite fortunate.”

Private loans, as McIntyre pointed out, can be more convenient, but they typically have higher interest rates than conventional loans.

2. Conditional financing

The buyer takes over the existing financing with subject-to financing. You do not actually assume the mortgage; it remains in the seller’s name with the same terms; however, you will make mortgage payments on the seller’s behalf.

“When you buy the house and it changes over into your name, you’re going to keep the mortgage and make the payments for that mortgage company,” McIntyre explained. “You may also be making payments to the seller for any equity they have in the home, and you would still be paying the seller a down payment.”

The main advantage for the buyer, especially in today’s high-interest-rate environment, is the possibility of inheriting a low interest rate.

“You could now have a 3% interest rate instead of an 8% interest rate,” McIntyre said. “That means the payment will be much lower, and you might be able to get some cash flow when you couldn’t before.”

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Furthermore, the buyer is not required to qualify for a loan and may be able to purchase with a lower down payment.

She also mentioned that there are advantages for the seller: “The seller becomes the lender, which means they can create terms however they want.” With subject-to, everything is negotiable. That means the seller could accept less than a 20% down payment — perhaps 5-10% — and then charge more than the market rate price.”

McIntyre, who is also a realtor, has recently been assisting sellers in listing their properties subject-to and determining how to structure the terms.

“I’ve sold some homes for $50,000 to $100,000 more than the market rate because they can offer this low interest rate and low down payment,” she explained. “Everything serves as a lever. You can pull one up and make others fall.”

3. House hacking

“House hacking” is a strategy in which you rent out a portion of your home to reduce — or even eliminate — your housing payment. You can have roommates who will pay off your mortgage for you.

Insider spoke with a few real estate investors who used house hacking to get started and build equity faster.

According to McIntyre, this strategy has a couple of financial advantages. One, because you are actually living in the property, you may be eligible for an FHA loan, which is a government-backed mortgage that allows people to buy a home with as little as 3.5% down.

“The other benefit is that you get a lower interest rate than you probably would if you bought an investment property,” she added, noting that financing an investment property is typically more expensive than financing a primary residence. “Those two advantages really allow someone to get in with very little.”

McIntyre practiced house hacking when she first started out and didn’t yet own a home. Instead of leasing a room in her own home, she sublet a portion of her apartment.

She likes to highlight creative ways to get your foot in the door because she’s learned that, in the end, wealth is built from time in the market, which means that if you can buy and hold property sooner rather than later, you’ll be in a better position later on.

“The best thing you have in your favor is starting as soon as you can,” McIntyre advised. “I’ve devised novel ways to generate cash flow, but the majority of the cash flow is insignificant.” A large portion of that is reinvested back into the home — things break — and is consumed by the cost of home maintenance. However, the gains over time are where we make money as real estate investors.”