Mortgages & Creative Financing

The Simple Truth About Whether No Money Down Real Estate Can Work for You

Expertise: Mortgages & Creative Financing, Personal Development, Landlording & Rental Properties, Personal Finance, Real Estate News & Commentary, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Business Management, Commercial Real Estate
172 Articles Written

We talk about no money down rather chivalrously, don’t we? I mean, there is this guy I know — I think his name is Brandon something (wears the same shirt every day and really needs to shave that dead animal on his chin) — who wrote a book on no money down.

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I am not much better, with a course teaching people how to be creative…

As if!

This is some hard stuff, y’all. This is risky, and it is difficult, and there are more caveats to NMD than hairs on Brandon’s face (that’s a lot). Trying to boil this stuff down to a few key elements is not easy, but let’s give it a shot!

Take Care of Your Financial House First

If you’re going ask people to give you money, you must know how to run your financial life, meaning income minus expenses is a positive number. If you are living off credit cards, the worst thing you can do is take money from someone.

Simple as that!


There is No Such Thing as Free Property

This really makes me laugh, but once in a while someone still asks me if property could be bought with no money. Let me spell this out, just to be sure we are on the same page:

Related: The 3 Things That Make No Money Down Real Estate Dangerous

In our economy, currency is the medium of exchange. If you are going to gain ownership of property, most of the time you’ll have to pay money. Yes, you can control property without title transfer, and you can do some other creative things. But, by and large, you’ll have to pay money for the purchase.

This being said, if the money is not yours, it is someone else’s. Whether it’s owner financing or any blended third party financing, it is someone else’s money you are looking to finance your deal. That’s why we call it “creative Finance.” 

I hope you are not a schmuck that no one wants to give money to — are you?

Your Friends

Let’s be logical here. You are not a big time operator. You don’t have an investor database to fund your deals. What you are is a young start up with a good deal, and you need someone who likes and trusts you enough to throw you a bone!

Dude, this person will be your relative (Brandon’s dad gave him his start by investing with him in that 24-unit), a co-worker who respects you, or a business client who is satisfied by you, etc. Are you seeing the picture?

Related: A Realistic Look at Starting Out in Real Estate Investing With No Money

Now, if you are not someone who is liked and trusted by people, then think twice about how you live your life. Similarly, if no one in your inner circle can write that check, then re-evaluate the people you hang with. 


Underwrite Like a Pro

OK, even if people like you and are not opposed to helping you, they won’t do it to their own detriment. You have to make reasonable proposals in order to have a chance at hearing a “yes” on occasion.

Well, to make reasonable proposals, you have to know what the hell you are doing — plain and simple. If you don’t, study!


I know all of the above is simple. But truth usually is simple!

Good luck!

Do you use no money down strategies to buy real estate? What do you think of the above advice?

Let me know your thoughts with a comment.

Ben has been investing in multifamily residential real estate for over a decade. An expert in creative financing, he has been a guest on numerous real estate-related podcasts, including the BiggerPockets Podcast. He was also featured on the cover of REI Wealth Monthly and is a public speaker at events across the country. Ben is the creator of Cash Flow Freedom University, the author of House Hacking, and a noted Multifamily Underwriting coach. Through his company, Source Capital LLC, Ben currently operates $40M of multifamily real estate. Learn more about him at

    Tom Phelan
    Replied over 3 years ago
    Naturally everything depends on the circumstances. Sometimes a no down “Investment Property” can also be your residence when creative financing is used. Although you can’t do it today my wife and I purchased a brand new home in Denver in 2004 for $730,000 with a 80% 1st and 20% 2nd (no down). About two years later we sold it for $1,200,000. In some areas of the country people might be able to obtain a 80% 1st and 20% Seller Carry Back 2nd. The key here is to know your market and where it is likely to go. And to have a stable income to make the higher mortgage payments.
    Kyle Atans Investor from Sherman Oaks, California
    Replied over 3 years ago
    Great point !
    Bruce Silverman
    Replied over 3 years ago
    The main problem I hear from investors who are using high LTV lenders, i.e “No Money Down”, is that their interest rate and fees are higher, and they take a piece of the deal. By the time you rehab and sell the house, the lender will then tack their interest, points and percentage of the profits onto the back of the deal, and you walk away with far less profit than you had originally anticipated. Don’t get me wrong, for someone with little to no money who wants to “fix & flip”, this may be the only option. Just remember, you’re working for the lender, not the other way around.
    Susan Maneck Investor from Jackson, Mississippi
    Replied over 3 years ago
    You mention not living on credit cards. Am I the only one who sometimes uses their credit cards to buy houses? After all, a balance transfer is the lowest interest rates you can get! The trick is never to let the that interest rate expire.
    Tim Rehmel from Enid, Oklahoma
    Replied over 3 years ago
    Susan, I think he meant using credit card debt for daily living expenses, buying consumer goods, etc. Using debt (including credit cards) to fund investments is a different story. If the interest rate and other terms work in your favor on the investment, that sounds good to me.
    Connor Riley from Olympia, Washington
    Replied over 3 years ago
    Ben, thanks for the article. As someone in the ‘education phase’ of their real estate investing journey, I appreciate the realistic perspective. Its awfully easy to get excited and make emotional decisions or gut reactions, but everything I’ve read and personal life experiences point to business success growing out of well-rationed, realistic decision making. @Susan_Maneck: I can’t say that I’ve read anything about using credit cards; it seems like it might be a little risky (but I tend to be fairly prudent). What happens when there’s not another credit card available?
    John Wielgolinski Investor from Clearwater, Florida
    Replied about 3 years ago
    I think you meant Cavalier, not Chivalrous.