{"id":111658,"date":"2019-06-05T12:00:16","date_gmt":"2019-06-05T18:00:16","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=111658"},"modified":"2024-02-24T12:03:59","modified_gmt":"2024-02-24T19:03:59","slug":"buy-real-estate-investment-no-money","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/buy-real-estate-investment-no-money","title":{"rendered":"How to Buy a Rental Property With No Money: 10 Strategies for Real Estate Investors"},"content":{"rendered":"\n<p>So you have been dreaming about buying a rental property, but don&#8217;t have enough money to put down. Many would say dream on, right? Little do they know that there are ways to invest in real estate without having the money upfront.<\/p>\n\n\n\n<p>But how? The dream seems impossible when you don&#8217;t have any cash to put down. However, I&#8217;m telling you, it is very much possible.&nbsp;<\/p>\n\n\n\n<p>Interested? Let&#8217;s dive into at least 10 different ways to purchase rental properties with empty pockets in real estate investing.<\/p>\n\n\n\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/epwmYUiMv1M\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">10 Ways To Buy an Investment Property With No Money<\/h2>\n\n\n\n<p>Here are a few options for those looking to invest in real estate\u2014specifically rental properties\u2014but have no money to put down.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Partners<\/h3>\n\n\n\n<p>Finding a good partner to help fund a deal is one of the best ways to <a href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-finance-how-to-plan-for-investment-success\" target=\"_blank\" rel=\"noreferrer noopener\">finance a piece of real estate<\/a>. It\u2019s also one that many investors without a lot of cash begin with. Rather than getting overwhelmed with many different loan options, partnerships offer a more low-key arrangement than going through the loan application process.<\/p>\n\n\n\n<p>Partnerships work because of something we call the \u201cdeal delta.\u201d To put together a real estate deal, three things are required:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Knowledge<\/li>\n\n\n\n<li>Hustle<\/li>\n\n\n\n<li>Money<\/li>\n<\/ol>\n\n\n\n<p>But here\u2019s the thing: You don\u2019t need to provide all three. Instead, partners can make up the difference in what you lack.<\/p>\n\n\n\n<p>I spoke with some friends from church\u2014of all places\u2014who I had known for many years and knew shared an interest in real estate. This couple both worked stable government jobs, had good incomes, and <a href=\"https:\/\/www.biggerpockets.com\/blog\/credit-score-buy-house\" target=\"_blank\" rel=\"noreferrer noopener\">had excellent credit<\/a>. What they didn\u2019t have was time.<\/p>\n\n\n\n<p>They wanted to get into real estate but lacked the time or \u201chustle\u201d needed to complete the deal delta. So I proposed a solution: I would take care of the rest if they came up with the initial down payment of $35,000.<\/p>\n\n\n\n<p>I would bring the knowledge and the hustle; they would get the cash for the down payment. We\u2019ve owned this deal for almost six years, and each year, we save up our cash flow until the end of the year, then split everything evenly\u201450\/50.<\/p>\n\n\n\n<p>So take the time needed to find and vet your potential partner. Find someone who fits your style, goals, and ambitions.<\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_64d40f7eec84c: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_64d40f7eec84c\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/buy-real-estate-investment-no-money', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/buy-real-estate-investment-no-money',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/buy-real-estate-investment-no-money', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h3 class=\"wp-block-heading\">2. Seller\u2019s mortgage<\/h3>\n\n\n\n<p>Suppose a property owner, Susie, wants to sell her home. As a real estate investor with no money to put down, working on a deal with Susie seems like quite the task. However, there is an option to assume the seller\u2019s mortgage.<\/p>\n\n\n\n<p>For a mortgage assumption, you, the investor, assume the seller\u2019s existing mortgage and make payments on their behalf. Oh, and guess what? The seller\u2019s existing financing is at 3%. Not bad, right?<\/p>\n\n\n\n<p>Keep in mind that if you were to go the conventional financing route, lenders often won\u2019t let you <a href=\"https:\/\/www.biggerpockets.com\/blog\/down-payment\" target=\"_blank\" rel=\"noreferrer noopener\">borrow the down payment<\/a>. It\u2019s almost like they want you to prove you\u2019re worthy of coming up with that money in the first place.<\/p>\n\n\n\n<p>In the case of assuming a seller\u2019s mortgage, you pay the seller separately for any difference and however you want to pay. Read the fine print before taking the mortgage to ensure that there is no due-on-sale clause that prohibits the new buyer from assuming the mortgage.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Credit cards<\/h3>\n\n\n\n<p>Credit cards have their benefits, whether it\u2019s a super-low interest rate or a free vacation to the Bahamas using reward points. Using a credit card can benefit you in some capacity if used wisely.<\/p>\n\n\n\n<p>Let\u2019s say you use a business card with an initial 0% interest rate and a few cash back reward offers to put down the down payment on an investment property. It may look like this: You purchase a rental property for $200,000 and get a landlord loan for $180,000\u2014you\u2019re left with a balance of $20,000, your down payment. <a href=\"https:\/\/www.biggerpockets.com\/blog\/smartest-credit-cards\" target=\"_blank\" rel=\"noreferrer noopener\">As with many credit cards<\/a>, there will be a wire advance fee, but you may get cash back, given your credit card\u2019s reward setup.<\/p>\n\n\n\n<p>A word of advice: Pay attention to your no-interest rate term and any fees associated with advances or balance transfers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. House hacking<\/h3>\n\n\n\n<p>House hacking is a simple, easy way to buy your first investment property. As a beginner real estate investor, you buy a triplex down the street, live in one of the units, and rent out the other two doors.<\/p>\n\n\n\n<p>By renting out the other two doors, you ask for rent covering your own mortgage payments and additional costs, which essentially allows you to live in the house for free.<\/p>\n\n\n\n<p>What if you want to move out? No problem\u2014keep it as a traditional rental property and let that rental income flow in.&nbsp;<\/p>\n\n\n\n<p>But remember, you have little money to put down on an investment property. No stress! If you plan to have an <a href=\"https:\/\/www.biggerpockets.com\/blog\/owner-occupied-financing\" target=\"_blank\" rel=\"noreferrer noopener\">owner-occupied property<\/a>, traditional lenders are more likely to offer a lower down payment.<\/p>\n\n\n\n<p>One popular loan program for lower down payments is FHA. FHA loans offer a 3.5% down payment if your credit score exceeds 580.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5. Private money<\/h3>\n\n\n\n<p>Yes, it is uncomfortable to ask people for money\u2014especially if you know them. However, as you begin to grow as an investor and build your reputation and portfolio, the people in your life will be more likely to lend you money.<\/p>\n\n\n\n<p>By borrowing private money loans from friends, family members, and other acquaintances for your investment property, you negotiate loan terms that fit both parties.<\/p>\n\n\n\n<p>For example, I receive money at 15% interest thanks to a real estate investing duo I know. Yes, it seems like a lot, considering <a href=\"https:\/\/www.biggerpockets.com\/loans\" target=\"_blank\" rel=\"noreferrer noopener\">interest rates are pretty high<\/a> right now. However, I don\u2019t mind paying the higher interest rate. Why?<\/p>\n\n\n\n<p>The duo didn\u2019t charge for much else in the investment deal. There were no points or closing costs toward the beginning of the loan, and they left the repayment date open. If you think about it, they saved me thousands just in closing costs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">6. Seller financing<\/h3>\n\n\n\n<p>Suddenly, you have loan options popping up everywhere\u2014your TV, mobile app, or your computer\u2014because you&#8217;ve been &#8220;cookied&#8221; thanks to the World Wide Web. Have no fear\u2014luckily, you don&#8217;t need to turn to a lender to get money.<\/p>\n\n\n\n<p>Purchasing an investment property with no money down doesn\u2019t mean your financing must go through a lender like a bank. Seller financing is another option for investing in rental property. This type of loan is an agreement where the seller is the bank.&nbsp;<\/p>\n\n\n\n<p>The seller handles the mortgage process instead of a bank or financial institution. The borrower, you, repays the loan as specified in the repayment terms. The <a href=\"https:\/\/www.biggerpockets.com\/blog\/seller-financing\" target=\"_blank\" rel=\"noreferrer noopener\">repayment terms for seller financing<\/a> are usually in a formal agreement.<\/p>\n\n\n\n<p>Real estate investors who find a seller with no mortgage are like the gold of all gold because the seller doesn\u2019t have a mortgage burden, and they can make some extra cash by taking on the role of the financier.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">7. Hard money loans<\/h3>\n\n\n\n<p>A hard money loan is known as a home flipper\u2019s go-to. These nonconforming loans are generally provided by private money lenders, individual real estate investors, or groups that provide money up front for short-term borrowing.<\/p>\n\n\n\n<p>Most of the time, hard money lenders offer high interest rates and short terms. If you find a deal on a fixer-upper and <a href=\"https:\/\/www.biggerpockets.com\/blog\/hard-money-loan\" target=\"_blank\" rel=\"noreferrer noopener\">qualify for a hard money loan<\/a>, purchasing it with little to no down payment is possible.<\/p>\n\n\n\n<p>Remember, hard money lenders are typically not as strict as traditional mortgage lenders, making it even more attractive to someone who wants to invest in property with no money.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">8. Cash out refinance<\/h3>\n\n\n\n<p>You have a primary residence and want to invest in a few rental properties. You can use your home\u2019s equity for something called cash-out refinancing.<\/p>\n\n\n\n<p>A cash out refinance allows you to take out another mortgage for a higher amount than you owe. Then you use the extra loan amount as a lump sum of cash to put into another real estate investment, possibly even using it as a down payment.<\/p>\n\n\n\n<p>If you have enough <a href=\"https:\/\/www.biggerpockets.com\/blog\/5-reasons-utilize-equity\" target=\"_blank\" rel=\"noreferrer noopener\">equity in your home<\/a>, you can take it out for real estate investing so that you have enough money to buy that next piece of property you\u2019ve been eyeing.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">9. Gap lenders<\/h3>\n\n\n\n<p>These lenders cover the down payment for your next real estate investment and will take partial ownership interest in the property in exchange for covering some or all of your down payment. The catch? This real estate deal has excessively high interest rates and fees to cover its high risk.<\/p>\n\n\n\n<p>Gap funding is very costly. If you can\u2019t use your own money, consider discussing a real estate deal with a gap lender. But be careful\u2014these particular deals come at quite a price.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">10. The BRRRR method<\/h3>\n\n\n\n<p>The BRRRR is a traditional method that stands for buy, renovate, rent, refinance, and repeat.<\/p>\n\n\n\n<p>This one is a little tricky, as you&#8217;ll need to follow through with one of the above methods before diving into this one.<\/p>\n\n\n\n<p>Let&#8217;s say you spot a fixer-upper down the road from you. I mean, this house looks like it&#8217;s about to collapse. At the time, you have no money. So, you use one of these methods, like a hard money loan, to purchase the property.<\/p>\n\n\n\n<p>Keep in mind that the houses that look like they&#8217;ve been abandoned for 25 years are typically discounted substantially. So you ask your hard money lender, Tommy, for $60,000.<\/p>\n\n\n\n<p>Let&#8217;s say you&#8217;re a superstar negotiator and you get the property for $45,000. It&#8217;s time to renovate. We&#8217;ve got two options here; one will obviously cost you more than the other. You can hire contractors, or if you&#8217;re super handy, <a href=\"https:\/\/www.biggerpockets.com\/blog\/2015-06-15-should-i-hire-a-general-contractor\" target=\"_blank\" rel=\"noreferrer noopener\">do the work yourself<\/a> using the $15,000 left over from the hard money loan to renovate the property.<\/p>\n\n\n\n<p>Whatever you do, the ultimate goal is to get to the next step: renting.<\/p>\n\n\n\n<p>Once you rent out the property to tenants, you opt to do a cash out refinance on the rental property. Through this refinance, the loan is based on the property&#8217;s increased value since you originally purchased it.&nbsp;<\/p>\n\n\n\n<p>Guess what? The property is now worth $100,000. With that $100,000, you can now pay Tommy his initial investment of $60,000 and opt to use the additional $40,000 for possibly more investment properties.<\/p>\n\n\n\n<p>Rinse, wash, and repeat this method to continuously build your real estate portfolio.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Which Strategy Will You Choose?<\/h2>\n\n\n\n<p>It\u2019s tough to see the positive when you don\u2019t have any money to put down on an investment property. If you are interested in real estate investing and explicitly interested in <a href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-703\" target=\"_blank\" rel=\"noreferrer noopener\">buying rental properties<\/a>, you can do so without any money. <\/p>\n\n\n\n<p>From house hacking to seller financing to diving into your own home\u2019s home equity, there are multiple options to start investing in real estate without using your own money.<\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_f80959bb27a5df7c060135f2981ad939\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_cc8f0c0cdb680c5629d7e12ec77ade81\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_ceffe84b4d6cf57384a75685ab28f89e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\"\n        x-on:click=\"window.analytics.track('Blog Block | B2C Marketplace Lender Finder', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/buy-real-estate-investment-no-money',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/signup\"\n        x-on:click=\"window.analytics.track('Blog Block | Acquisition | Free Membership Signup', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/buy-real-estate-investment-no-money',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Don&#8217;t let a lack of capital get in the way of a good deal!<\/p>\n","protected":false},"author":710,"featured_media":111702,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7406],"tags":[],"class_list":["post-111658","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-creative-financing"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/111658","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/710"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=111658"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/111658\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/111702"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=111658"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=111658"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=111658"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}