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?