10 WAYS TO BUY AN INVESTMENT PROPERTY WITH NO MONEY DOWN

[John Stevenson]

Many people would like to invest in real estate but either they do not have enough money for a down payment or they do not want to lock their cash into a property purchase. It is possible to buy property with no money down.

1. Roll the down payment into the purchase price. Depending on your credit rating and lending history, some lenders will allow you to finance 100% of the purchase price. This will cause the interest rate and your payments to much higher than if you put money down. But, if you intend to sell the property quickly, it shouldn’t have much of an effect on your profit margin.

2. Negotiate a separate installment plan for the down payment. Negotiate a separate installment plan for the down payment. Sometimes the seller will allow you to pay the down payment on a monthly basis.

3. Trade something other than cash. This could include land, a car, a boat, jewelry or valuable collectibles. Find out what they want and need. Maybe you have, or can get, just what they are looking for. You could also trade services such as carpentry, auto mechanics, painting, dental work and other services that you can do for the seller over time.

4. Trade houses with the seller. Many professional investors acquire homes with no money down by trading one property for another. In some cases, they trade one large property for several smaller rentals. Property trading is also a legal way to avoid the capital gains associated with selling a property.

5. Get the seller to transfer their mortgage to you. This is a common occurrence in foreclosures where the homeowner is eager to sell and is willing to work with the buyer. You can do the deal as an assignment of contract and efficiently close the sale.

6. Apply for a loan assistance program. Talk to your bank, many lending institutions offer programs that allow buyers to put little to no money down on real estate purchases.

7. Find an investment partner. Look for an investment partner who will put up some or all of the cash in an equity-sharing partnership. You make the monthly payments and the two of you split the eventual resale profits.

8. Find a property to rent-to-own or lease with an option to buy. If you have a lease-option for 5 years, at the end of that time, you will need to purchase the house and can get a bank loan then. Meanwhile, you can use the time to fix your credit and/or save for a down payment. Some contracts may put some or all of the rental amount towards the down payment.

9. Get owner financing or a land contract. Another option is to have the seller act as the bank. You make your payments, including interest, directly to the seller. Then after usually 3 to 5 years you make a lump sum payment to the seller. During this time, you should have enough equity to qualify for a standard bank loan.

10. Use a home equity line of credit from another property. If you have equity in another property, you could use that equity as a down payment on purchasing another investment property.

[Alan DeRossett]

@David Kruiac, I have one multifamily building that's now paid off and the landlord next door has promised to sell his building to me. But now think his pre-COVID-19 price is too high and might not want to buy at his old price even thought together my overall operating cost would decrease owning Both Buildings. The other landlord does not want to pay a high capital gains tax so would consider a land contract with 4 or 5 annual payments instead of earning all in one year. if I did a 71% seller financing, 29% second mortgage like you've done would a bank issue a 2nd? or must the owner agree to bank terms to subordinate to the 2nd? to complicate things did not want to trigger the property tax increase of a sale until the land contract is completed and transfer is made and I use a New LLC so it would have no credit yet. I also did not want to encumber my existing building since it is paid off. Prefer to leave it alone as the banks all seem to be sharks waiting to make a kill.

[Ruben Correa]

@John Stevenson how can i get the seller to transfer the mortgage to me? What is the process. This option sound very good

[Ruben Correa]

@Deni Hurd i am in orlando also. Let’s see what we can do

[Thomas Greer]

A lot of posts and some good discussion.  I would say that you cannot escape basic finance theory and fundamentals.  

Leverage = Risk by definition.

Having equity in a deal is not bad and I cannot imagine a long-term winning strategy that has you purchasing homes with none.  Unless this part of some sort of high-risk, "tactical" return strategy in part of a larger diversified portfolio...then I guess go ahead.  But if you are looking for "zero-down" investments because you can't afford it...that is likely a recipe for disaster (in my humble opinion).  

[Andrew Greer]

I personally have bought several properties with "no money down" from myself. One major technique is being the operator in an investment partnership. I did this for several years and slowly moved partners and investors to gain more equity, at the same time my good partners stayed in house and we have grown to larger deals.

Another way, that I love, is own carry and/or AITD's (All inclusive trust deed) I have used this strategy in acquiring multi-family development opportunities so I could assemble multiple lots, take on the minimum expense and then pay them off with the syndication as we took it to construction. 

[Luis Rodriguez Jr]

What if your willing to trade your skill set and do all the leg work in exchange for less percentage back with little or no money down? The deals land on my lap and I also drive for dollars as well. 

[Michael Kingen]

@Ruben Correa  The process is called "Subject to" or buying a property subject to the existing mortgage 

[Tiffany Drahonovsky]

@Jonathan Owens where is your mini resort and can you talk about it more?

[Javier Rosales]

in order for number 2 to work, it would half to be seller financing?

[Wale Lawal]

@John Stevenson Great Post and comments here. I love the way everyone is pouring out creative financing strategies.

I have done couple of hard money financing where property makes a great deals typically 65% ARV or less LTV.

I will like to hear from my local investors on what creative financing strategy is working during this COVID-19 Pandemic.