Rental Property With No Money Down?

[Nick Coons]

I'm curious about what others think of this as a viable strategy. Essentially, it goes like this. Find a property that is available for purchase well under market value, say, 75% (so a property valued at $400k that can be purchased for $300k). Using a hard-money/private short-term loan to do the initial purchase, then refinancing it into a conventional loan. The purpose being to purchase a rental property without any money down.

I recognize there are a few possible challenges and threats with this approach:

• Finding such a property is more difficult than simply purchasing something for sale off the MLS at market price.
• Finding a hard-money/private lender willing to lend 100% of the purchase price.
• The possibility that the refinance doesn't go through for some reason and I'm stuck with an expensive hard-money/private loan that I can't pay off when due in 6-12 months.

Recognizing those:

1. Are there any potential challenges or threats that I missed that are unique to this scenario?
2. Is this a viable way to acquire a rental property without having to put any money down?

[Nick Coons]

Originally posted by @Jaron Walling:

@Nick Coons Sounds about right. Provided you're financially stable go out and find a deal 25% below market value, and get it under contract. If it's a good neighborhood and in decent condition the money will find you.  

It's 2022 and markets are still crazy. I'll send you some luck, you send me some back.

Definitely financially stable. Covering the mortgage without a tenant (post-refinance) wouldn't be a problem at all if the need were to arise. I could likely put money into savings for two years and have the needed $100k down. But there are some opportunities that I'd like to not wait two years for (or if they would even exist as they are in two years), so looking for some creative ways to get started sooner.

Luck coming your way, thanks!