Mortgages & Creative Financing

How to Invest in Real Estate with No Money Down (4 Rules You NEED to Follow!)

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Real Estate Investing Basics, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP
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real estate no money down

nomoneybook(The following is an excerpt from the recent book we published here at BiggerPockets, “The Book on Investing in Real Estate with No (and Low) Money Down.”  Pick up the physical book, the digital book, or the audiobook today at or get the physical book on Amazon! Now, onto the post!)

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How to Invest in Real Estate with No Money Down

I like to speed.

Traveling down the freeway, something just seems wrong about going the speed limit. I have to push the limits just a little. This is what intrigues me about the Autobahn in Germany. This federal highway has no federally mandated blanket speed limit, which makes it a dream for people like me.

However, just because the highway has no speed limits, that doesn’t mean a driver can afford to be stupid.

In fact, Autobahn drivers are mandated to control their speed during adverse weather conditions and in urban areas of the road. Additionally, an “advisory speed limit” of 81 mph applies to the entire freeway system to protect drivers.

What does this have to do with creative real estate investing?

Creativity in real estate is a kind of open road that often appears to be “rule free.” However, the same conditions that make it so exhilarating can also lead to the greatest crashes. Therefore, investing in creative real estate has its own “advisory speed limits” in the form of four important guidelines.

These are four of the primary rules and advisory limits of creative real estate investing. These have been passed down from one established investor to another with the goal of keeping aspiring investors from crashing and burning.

Let’s get to the 4 rules!

1.) When Investing with No (or Low) Money Down, You Need to Find Even Better Deals Than Those Who Invest Normally

No Money 1Let me explain what I mean.

Let’s say a certain home is worth $100,000. A traditional investor might pay $100,000 for that home, put a 30% down payment ($30,000) on the property, and make a nice return on investment from the cash flow (the extra money left after all the expenses are paid).

However, if I were to purchase that same house for $60,000 because I took the extra steps necessary to get a great deal, which of us is in the better position? The traditional investor, who has $30,000 of their cash tied up in their property and no real equity, or me, who has nothing invested but owes less?

Because of the deal I obtained, I have far greater potential for profit and for a better return on investment than the normal investor, but less of my cash is at risk because I have no cash invested at all.

However, what if I decided to be just a “normal” investor and pay full price for that $100,000 property, with no money down? Most likely, my mortgage payment would be so high that good cash flow would be out of reach, and I would not have the equity necessary to be able to sell the property. In this case, the “good” investor would be in a better position because they owed only $70,000. Hopefully, you are following my argument here… creative investing means you must invest in incredible deals, or it’s simply not worth doing.

There are exceptions to this rule, of course. Sometimes the method of financing can sweeten a deal enough to entice you to jump in.

2.) When Investing With No (or Low) Money Down, You Must Be Extremely Conservative

No Money 2I’m not talking politics here; I’m talking about planning for the future.

This means assuming the worst when buying property.

Take as a given that taxes will go up, your unit will sit vacant for a certain percentage of each year (higher than the average for your area), repairs will be numerous and expensive, and you will need to evict deadbeat tenants. Plan for these costs and only buy property that proves to still be a good deal even after a conservative estimate.

Although the analysis side of the real estate transaction is beyond the scope of this post, I encourage you to spend some time on this subject by studying how to analyze an investment property on BiggerPockets.  For a few comprehensive tools to help you analyze deals, be sure to check out The BiggerPockets Analysis Calculators

3.) Creative Finance Requires Sacrifice

No money 3My definition of creative finance is this: the ability to trade cash for creativity.

Notice there is a trade-off involved—one you need to accept if you are going to be a creative investor.

Most of the methods I’ve used to acquire real estate, I didn’t learn from a book. Instead, I discovered the methods at 4:00 a.m. after an eight-hour brainstorming session with my wife, my pen, and my paper, desperately trying to figure out the missing puzzle piece that would enable me to close a deal.

This is often the price – are you prepared to pay it?

It requires jumping through a lot of mental hoops, numerous conversations with others, and the ability to ask for help. Creative real estate investing is a puzzle that takes real mental (and sometimes physical) effort to put together.

If you want easy, then stick with a job, a sizable down payment, and average returns. There is nothing wrong with that, and I’d have chosen the same if I’d had enough money and income when I started. But I didn’t, so I chose creativity. I chose to sacrifice. Will you?

4.) Investing Without Your Own Money Does Not Mean Investing Without a Cushion

No Money 4A wise man and mentor once told me, “You can go broke buying good deals.”

Even though you need to get killer good deals if you are going to invest with no or little money down, you still need to understand that bad stuff happens. Murphy will show up on your doorstep and start knocking. He might even move his whole family in. (If you don’t understand the reference, Google “Murphy’s Law.”)

Therefore, maintaining a financial cushion to deal with problems is imperative. You probably don’t need $50,000 in the bank to buy a small rental house, but you do need to be able to weather the storms that will come, relative to the size of the property you are buying and that property’s risk for loss.

For example, if you needed to evict a tenant, could you handle several months of lost rent, more than $2,000 in eviction costs, and several thousands of dollars to repair the property? What if you had to do this twice in the same year?

These are important questions you must be able to answer, or at least discuss. However, these questions do have answers, so hang in there and keep your brain turning.

I can’t tell you exactly how much money you’ll need to save, because that depends largely on a number of factors, including the following:

  1. The strength of your target real estate market
  2. Your ability to manage effectively
  3. You ability and desire to repair things yourself, if needed
  4. How difficult and lengthy evictions are in your state
  5. How good your credit is
  6. How much cash flow you can get
  7. The average purchase price of your target properties
  8. The niche you enter
  9. The strategy you use
  10. And a whole lot more

The point is, be conservative, buy great deals, and have a financial backup plan. If this means spending six months working a second job to save up $5,000 to put into a savings account, then start that second job tomorrow. Maybe it means asking your boss for a raise or lowering your living expenses (remember… sacrifice!). Whatever you need to do, get started as soon as possible. Stop wasting time on excuses and start planning for how you are going to get there.

Related: The Book on Investing in Real Estate with No (and Low) Money Down

Furthermore, even though having a large financial cushion to weather storms can help you significantly offset risk, you cannot simply throw money at real estate investments and hope they turn out well. Education is key. Will you read the books, meet with the right people, study the right material, ask the right questions, and insist on becoming the best?

I hope so.


You know – I love creative investing. I love being able to put together a deal using little or no money of my own.

I love it so much that I wrote a book about it.

Like the Autobahn I discussed earlier, creative real estate investing can be a blast… IF you obey the rules.  The last thing I want to see is you crashing and burning on that road, so stick close to these guidelines on your journey toward financial freedom.

Now, it’s your turn. I’d love if you help me out with two simple things:

  1. If you liked this post, share this on your favorite social media channel! There are some buttons below.
  2. Leave me a comment below. Am I missing a rule? Do you disagree with one of them? Let’s talk!

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on,,, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.

    Dana B
    Replied about 5 years ago
    Hi I have seen many of the discussions of PMG, Thank you I almost spent the money for the membership and the time may be well wasted. Can any one help with private funding in Pa? Good credit, great deal. Thanks.please contact.
    Roberto Reyna
    Replied about 5 years ago
    Very good rules to follow Brandon, keep up the good work.!
    Brandon Turner
    Replied about 5 years ago
    Thanks Roberto! I appreciate the comment!
    Brandon Turner
    Replied about 5 years ago
    Thanks Roberto! I appreciate the comment! Reply Report comment
    Replied about 5 years ago
    Hmm just a question where can you get a finance property for 70k when hundreds have 100k cash for it? I am guessing not through a regular sale thats for sure…
    Kyle Hipp
    Replied about 5 years ago
    Many people have things for sale without it being listed. It might be the guy you are sitting next to at the dentist. It might be the parents you speak with while waiting to pick your child up from school. It might be the bank teller as you deposit a rent check. In my case, it might be the fire chief at 4am after a porch fire at a rental of yours. The point is that if real estate investing is a big part of your life then you will talk about it a lot. If you talk about it a lot, opportunities tend to just happen your way…
    James Kandasamy
    Replied about 5 years ago
    Brandon, I believe in one more rule. Reduce the middlemen when you want to get a good deal. for example 1) Do your own search (like own marketing) for the property. Not from public sites like MLS. 2) Eliminate real estate agents in between. 3) Be your own GC . Work direct with Subs, Its a bit more hard work but its worth it. james
    James Kandasamy
    Replied about 5 years ago
    Brandon, I believe in one more rule. Reduce the middlemen when you want to get a good deal. for example 1) Do your own search (like own marketing) for the property. Not from public sites like MLS. 2) Eliminate real estate agents in between. 3) Be your own GC . Work direct with Subs, Its a bit more hard work but its worth it. james
    Kerry Smith
    Replied about 5 years ago
    Andy, Brandon is using simplified numbers as reference for the article. You can definitely find deals like these or even better, but you’ve got to establish rapport, and build solid relationships with the people (realtors, investors, lenders, property managers) working in your real estate market. Also, finding motivated sellers through tax lien and displaced property owner searches (Listsource or AgentPro24/7) will offer several leads on properties that you can achieve these kinds of numbers with.
    Replied about 5 years ago
    The part I’m most curious about, which I assume are covered in the podcast and the book (both of which I’ll be checking out) is exactly HOW you make these deals happen with no skin in the game. Definitely advanced level stuff there.
    Kyle Hipp
    Replied about 5 years ago
    Building rapport and displaying a high level of enthusiasm and most importantly competency. I have done several deals with no money down. I then repair the property and refinance prior to the end of the land contract term. My most recent deal, I not only did not put any money in but walked away from closing with a sizable check. I have a large amount of work to do on the property and while I had the cash to do it one of the offers I made had the cash at closing option and I told the seller that would be best for me as my wife wanted me to get our kitchen done at home. With the sellers situation it was all the same to them wehter they paid out the cash or gave it up in equity so they gave the cash…
    Replied about 5 years ago
    Hey Brandon Good Stuff! The only thing I think I would include in your post. And I’m sure it’s in your book. Is that it is Crucial to stay the Course, Be persistent, Don’t give up. Good things don’t come easy. And it can and will happen. Thanks Again Brandon
    Jonna Weber
    Replied about 5 years ago
    I’m really looking forward to the read, Brandon! Great job on the podcast. I loved that you mentioned The One Thing, by Keller. I am in the middle of it right now – the simplicity of the concept is profound.
    William Barnard
    Replied about 5 years ago
    Forgive me Brandon as my brain may not be spinning as fast as yours but your 4 bullet points and the title of this blog has lost me. The way I see it, these 4 bullet points are essential to any investor regardless if you buy creatively or traditionally. In point 1, I would argue that the investor who works harder to negotiate a deal at $60k rather than paying full retail of $100k is better off regardless if they fund it creatively or traditionally, therefore, I fail to see your point based on the title here. I would agree that when using 100% financing! you typically will have higher holding costs due to more interest being paid (because you have borrowed more money) so in doing so,you should get a better deal to make up for it, but to compare apples to apples and all things being equal, each investor, they creative buyer and the traditional buyer should both have the same abilities to negotiate a good discount. This is why I believe your points above are not relevant to just the creative buyer but ANY buyer. And to be crystal clear, all 4 points are excellent and all investors should follow them. Two, I can argue that in some cases, buy buying creatively as opposed to traditionally, I can pay more than normal and not less. For example, on a rehab flip deal, rather than paying 12% interest to a hard money or private money lender on say a $100k loan (to keep it simple), if I buy creatively using owner financing and negotiate a 6% interest rate! I just saved $6k for that year in interest and therefore, I could offer to pay say $5k more than the next guy, still save $1k in interest and get the deal as opposed to the other guy who did not get the deal.
    Douglas Skipworth
    Replied about 5 years ago
    Great article, Brandon! This is exactly how I started. Using cash and a line of credit, I purchased a 900 sqft 3/1 house for $45k in 2007. I put another $5k in it and got it rented for $700/mo. I got an appraisal for $70k and the bank loaned me $50k at 5% for on a 20/20. For my first deal, I got in with $0 out of pocket. I am not exaggerating when I say that I’ve done this hundreds times over the past 7 years. The most recent deal was in July 2014 for 117 properties at $4.6 million (the bank loaned $3 million and the seller provided $1.6 million in owner financing)! In addition to Warren Buffett’s 2 rules (Rule 1 – Never lose money. Rule 2 – Never forget Rule #1), I live by 2 other rules. 1. Never put my money in the deal. 2. Never do a deal where I can’t wholesale the properties immediately for the amount of money I borrow. Gary Keller’s Millionaire Real Estate Investor has 2 great concepts along the same lines as your article. Know values, find opportunities, make deals! Buy it right, pay it down, pay it off! You’ve got to look at a hundreds of deals to find great opportunities, but it really is doable and it definitely is worth it!
    Replied almost 5 years ago
    Hi Douglas, I bought a house from the bank for 22500 put 17000. Rented it for 900. It appraised for 70000. What is a 20/20. Got the money off of a credit card. The bank would not lend against it do to my DTI. My question, What bank would lend if the owner would carry 20%. Where can you find a package of properties such as the one you spoke of?
    Douglas Skipworth Rental Property Investor from Memphis, TN
    Replied almost 5 years ago
    Trevor, here are answers to your three questions. 1. a 20/20 is a 20-year mortgage with a 20-year amortization. 2. a community bank would probably lend to you under the right conditions. 3. there are lots of packages in Memphis that would work for you. Hope that helps.
    Frankie Woods Investor from Albuquerque, NM
    Replied about 5 years ago
    Great comment to this excellent article!
    Douglas Skipworth Rental Property Investor from Memphis, TN
    Replied almost 5 years ago
    Thanks, Frankie.
    Replied about 5 years ago
    Brandon, Great article and podcast. I see the book is available as an audiobook; will it be available on Audible? I have an account with Audible and would love to save my next credit for this book. Thanks!
    Jim Volpe Investor from Wayne, Pennsylvania
    Replied almost 5 years ago
    Awfully convenient that the books is coming out just in time for Christmas. The best gift I could imagine is learning a creative process to produce these results.
    Innocent Azuogu from Surulere, Lagos
    Replied almost 5 years ago
    Brandon, This is a great article that needs digesting for us that are still on a learning process. I will study it meticulously and see how I can apply it here in Nigeria. Thanks
    Manila Goncalves Professional from Newmarket, Ontario
    Replied over 4 years ago
    This is a great article, I am a newbie and have already learnt so much. Currently reading the ultimate beginners guide to real estate investing. Tha k you for this website!
    Kim Keith Investor from Lewisville, Texas
    Replied over 4 years ago
    Sounds like some great words of wisdom to me!
    michael price
    Replied almost 4 years ago
    u are so positive im looking forward to this info to help me move forward into finacial freedom
    Tina S. Investor
    Replied almost 3 years ago
    I got a lot of good info from this article and the comments. I am a newbie, with a mentor but I still want to learn from all of you. I’m grateful that this site exists, with so many wanting and willing to share their experiences and help us get where they are now. My desire is to take what I can, and give back to those coming behind me. Thank you!
    Olatunbosun Idowu
    Replied almost 3 years ago
    Thanks Brandon, The post is great and I think you have mentioned some of these strategies and ideas in some of your other posts. I will see how i can put this to use in my country. Another thing i will like to add is that my IP was denied access to BiggerPockets website this morning and I have not been able to login to members area. I really don’t know what the problem is but am sure can be of great help in resolving this problem so i can be part of this wonderful BiggerPockets community as a contributing member. Thanks Olatunbosun Idowu
    Raffalene Liburd from Scranton, Pennsylvania
    Replied almost 3 years ago
    Thank you Brandon Keep the novice info coming. Really need the self education
    Replied over 2 years ago
    So it seems you are renting them after purchase. I have heard the best way to go is buy them then sell them owner financing. I am looking to start with mobile homes. I have been told example you buy mobile home for say 5K you list it for 9K owner financing $1000-$1500 down then $325 a month for 36 months. Doing that you are not the landlord having to fix stuff as they own it. If they get behind you reposes it, you sell it again same terms and make even more. So the question is is it better to rent or sell like that? I know renting in example I gave you may get $600 a month at cost of being the landlord fixing everything they mess up non stop. Owner financing you make a lot over time with interest but monthly is less also not landlord fixing everything.
    Derrich Phillips Real Estate Agent from Dallas, Texas
    Replied almost 2 years ago
    Great article! I’m purchasing the audiobook today. No more excuses, it’s time to take action.
    Zachary Bonnette from Wasilla, Alaska
    Replied over 1 year ago
    Hey Brandon! Great content! What are some good sources for acquiring funding with no money down? Or do you answer that in the book? I just ordered it! I currently use some one who charges a 15% success fee but that seems a little steep? Thank you!
    Brandon Payne
    Replied 5 months ago
    Why are all the the links to books for sale always broken?