Can I still do this?

38 Replies

I was a heavy user of the site about a year and a half ago. I never really secured any deals while I was trying to wholesale. However, I have wondered about something and I'd really like your input. My main interests in RE are in wholesaling and rental properties. I'm less interested in flipping, etc. With that said, I'm not a rich fellow and don't have a huge savings. I'm Muslim; my religion prohibits dealing with interest; either directly or indirectly. I cannot touch interest by a bank, person, etc. Is there still a way to do this or should I just forget about it? My goal in the future is to own several multifamily properties and rent them out to tenants. Considering that I cannot use a loan other than a 0% interest one; which I'm assuming doesn't even exist, is there any way to still accomplish my goal? 

Thanks.

What you can do is invest in the lower dollar amount areas, where the prices are too low to secure a loan anyway.

There are places in the midwest - indiana, ohio, michigan where you can start with the entry level homes. 

Originally posted by @Christine Kankowski :

What you can do is invest in the lower dollar amount areas, where the prices are too low to secure a loan anyway.

There are places in the midwest - indiana, ohio, michigan where you can start with the entry level homes. 

Thank you for your reply Christine. I definitely have to check this out. It sounds like a good way to stick with RE.

Originally posted by @David Cruice :

It's not impossible @Mohammad Haidarasl but it's going to be incredibly difficult for you to function in the real estate market without touching interest.  Best of luck to you, though!

Thank you David. You're correct, any which way I look at it, I see it as a very challenging road. Nevertheless, I'll bust my brain for a few more weeks to see what I can come up with, if anything.

Originally posted by @Matt J. :
@Mohammad Haidarasl Pay cash = no interest. Going to be hard to leverage without paying interest as well. Good luck.

You're right Matt, thank you for your reply. I guess if I can find a decent multifamily home and purchase it with cash, I'll try using that way as an entry into the rental property realm.

Originally posted by @Karen Rittenhouse :

@Mohammad Haidarasl Seller financing is also an option. Takes good negotiating skills but often a seller is looking for steady income and will sell, as an example, a $100,000 house for 100 payments of $1000.

 Thank you so much Karen. This has really restored my faith in that I may be able to continue in my Real Estate journey. Do you recommend any source to continue researching into seller financing?

Originally posted by @Alina Trigub :

@Mohammad Haidarasl Why don't you pursue wholesaling? No loans/interests involved.

 Thank you for your reply Alina! Yes, I definitely will continue wholesaling. I was never lucky enough to secure a deal, but I feel as though if I got a few under my belt it would build my confidence. I assume this and seller financing is my only two ways into deals in RE.

Originally posted by @Jason D. :
@Mohammad Haidarasl when you say "directly or indirectly", does that mean that you couldnt sell to someone obtaining a loan? Buying rentals with cash may be your best option.

 Jason, thank you so much for your reply. In all actuality, that is a wonderful question that I myself do not know the answer to. I am going to research and get back to you on it shortly. 

@Mohammad thank you, I'd be curious to know the answer. If that counted as indirectly, it could prove to make real estate more difficult for you.
@Mohammad Haidarasl I am tagging @Omar Khan because I believe him and I discussed a while back a loan product meant for people who don’t want to deal with interest. I can’t remember the name of the bank but maybe he does. Good luck!

@Mohammad Haidarasl

You could certainly put together a syndication of like-minded investors and pool your resources.  If you can buy wholesales with syndication cash and sell for more cash it is no different than buying with bank cash and selling for more cash, except that you don't have to pay interest to secure the cash.  If the other investors get a good return, they will stick with you and you can do this all day long.  

It's a bit more difficult with "buy and hold" rental property  because you don't get the capital back immediately, but you can set a goal of building a reserve account from the proceeds of each wholesale that you will then use to buy rental properties, you can do it.  It will take some time on the front end, but each time you buy a debt-free (or 0% interest) home you will see the process gain speed. The other option is to partner with like-minded (but wealthier) investors on cash-flow homes.  If you can act as minority partner, finding deals that return a great rate to the equity partner, you can begin to accumulate a decent income from rental property even though you have put no money down.  The investor is happy because he/she is getting 12% or so on their cash--it's a win/win and no interest exchanges hands.

@Mohammad Haidarasl

A question I have for you.  I understand that the Koran is referring to usury interest and not a fair and just interest rate.  I studied banking in college and I recall Muslim academics saying usury interest is the problem.  Just my thoughts.

Mark

Originally posted by @Mohammad Haidarasl :

I was a heavy user of the site about a year and a half ago. I never really secured any deals while I was trying to wholesale. However, I have wondered about something and I'd really like your input. My main interests in RE are in wholesaling and rental properties. I'm less interested in flipping, etc. With that said, I'm not a rich fellow and don't have a huge savings. I'm Muslim; my religion prohibits dealing with interest; either directly or indirectly. I cannot touch interest by a bank, person, etc. Is there still a way to do this or should I just forget about it? My goal in the future is to own several multifamily properties and rent them out to tenants. Considering that I cannot use a loan other than a 0% interest one; which I'm assuming doesn't even exist, is there any way to still accomplish my goal? 

Thanks.

 Not Muslim but I do know of Guidance Residential and Dewan Bank which offer Islamic financing to people in the US (a close friend of mine worked for Guidance). Lots of people in the Muslim community in California seem to use them. I don't know if they will do investment properties though (maybe only primary residence), but I think if they are willing to finance 1 unit, there is no reason they wouldn't do 1 to 4 units (because 1 to 4 units are residential and treated in the same category, upwards of 5 units is commercial financing). The thing you have to confirm, is whether they offer products for investment properties. If not, you could consider buying a 4 unit, and living in one unit, renting the other three. 

Also, as others have noted, you can buy in cash in cheaper markets, with high cash flow, and you could reinvest that cash flow into buying additional properties. It would take you longer than the traditional interest-based right, but it is possible. I'm sure if you go to Cleveland, Indy, Kansas City etc you can find deals in this category. 

@Mohammad Haidarasl , I give honor to your faithfulness to the tenets of your religion.  And I love the philosophy of generosity and care for others that is the bed rock of reasoning on why interest of that sort is Riba to the Prophet and scholars of Islam.  I am very interested to hear of solutions for this dilemma because at its innermost this is a problem for all of society not simply for those of the Muslim Faith.  In the Judeo/Christian ethic we are taught that the borrower is always the slave to the lender (prov 22:7).  So I will be watching this thread closely!!

I am curious though if this is a new conversion or philosophy for you since you mention student loans in your profile.  Are they considered different somehow?  If so there may be a way to leverage that distinction to your benefit.