Can I get into real estate without dealing with interest?

Question

As I researched more into my faith, I figured out that I cannot deal with interest (am to refrain from it as much as I possibly can). Is there anyway that I can eventually become a real estate investor/ developer without touching interest? Since I'm not far into my major yet, and am barely in the beginning stages, I'm not too sure about whether or not this is possible. Any enlightenment on this topic would be fantastic. Thanks.

James Reynante · Answer

Hi Mohammad- I recall seeing one technique used by a real estate investor that allowed him to sell a property without charging interest for property he sold. I'll try to explain how it worked below.

He was selling a parcel of vacant land for $8,000 and offered two different purchase options:

Option 1. Seller Financing - He offer to carry the note for the buyer of his vacant land. It required a $2,000 down payment. The remaining $6,000 was to be paid in monthly installments of $200/mo until paid in full, plus $10/mo for property tax. This was presented as a no-interest arrangement.

Option 2. Cash Purchase. If a buyer could purchase the property with all cash, the seller was offered a discounted price of $5,000 upon closing.

I hope this makes sense and helps you think of ways to stay involved with real estate investing.

Account Closed · Answer

No problem!  I will tell you this though:  Most banks, and I can't speak for the Islamic ones, want you to come to the table with some cash.  They like to see that you have some skin in the game so to speak.  I would also suggest asking friends and family to see if they want to loan you the necessary cash to start investing.

I would venture to say that it's difficult, but not impossible to invest under your particular set of circumstances.

Good luck in your search!

Account Closed · Answer

Hi Mohammad,

I assume you mean an Islamic banking without interest?  If so, I believe there are a few banks in the US, however, these are VERY rare, and I'm not sure if they'll lend for investment homes.  But, couldn't hurt to search one out.  Here's what I found:

https://www.google.com/search?q=islamic+banks+in+u...

Account Closed · Answer

Absolutely happy to help!  Just make sure you have a clear plan on what you want, and be prepared to be told "no" a LOT and make a ton of calls to banks.  In my own set of circumstances, I've had to deal with several banks, been told "no" by about 10 banks, had 3 property managers, and a tenant who's just a pain.

But, because I had a clear plan and goals on what I was trying to achieve, I'm slowly getting there.  I'm happy to say that by the end of the summer, I should have absolutely everything running butter smooth.

So, don't get discouraged, and you'll do great!

Mohammad Haidarasl · Answer

Thanks so much Travis, you answered my question and also gave me motivation to continue! This life we have chosen is precious and I wouldn't want to switch my major to something other than real estate!

Mohammad Haidarasl · Answer

Thanks for getting back to me, I truly appreciate it! Yes, that is exactly what I was referring to. I was wondering, starting off trying to invest, I literally don't have my own capital to purchase a home to eventually flip, rent, or sell, so I'd need to borrow, but I wouldn't be able to use interest, so was just curious if there was any other options for me to get started.

Can I get into real estate without dealing with interest?

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