4 ways to buy real estate with no down payment

When I first got into the real estate investing game, it seemed very difficult to learn any real way to buy property with no money out of pocket. To say the least, he was bummed out. To save some of our newest members from the same frustration, here are 4 tried-and-true “no money down” real estate investment methods. owner’s finances

In a nutshell, this is what happens when the owner owns the property free and clear and gives you credit in the form of promissory notes and mortgages. If you negotiate owner financing correctly, you can access the property with no down payment. What’s more, if you are really smart in your negotiations, you can also get a pretty good interest rate. The downside to this method is that most homeowners simply won’t do it. There are those who will, but they are a small minority among motivated salespeople, and an even smaller minority among salespeople in general. If you can negotiate owner financing, good for you! If not, maybe one of these other methods will work better for you.

The “general” mortgage

The blanket mortgage is one of my least favorite methods, for one simple reason: profit. The seller gets the tax benefits while the investor pays the mortgage. In a blanket mortgage agreement, you (the investor) make payments to the owner that exactly match the owner’s mortgage/insurance payments. The owner then pays his mortgage and insurance in kind, getting all the benefits of the property without paying a dime. Another pitfall of this method is the possibility of a dishonest seller taking an investor’s money for 3 or 4 months until the bank forecloses, then declares bankruptcy, thus keeping the house and the owner’s money. investor and leave the bank and the investor in the lurch. You can use this method, but be very careful!

The Partner / Sponsor

This method can be very lucrative for you and your partner/sponsor. You simply find someone willing to invest their money in your business, while you invest your time, knowledge, negotiating skills, and other efforts. You can split the profits any way you want, and none of the money for a deal comes from you!

the assumption

One day people will write songs praising affordable home loans. Until then, let me give you a brief summary about them. An assumable loan is a loan that anyone can assume as long as they meet the lender’s qualifications in terms of credit score, employment history, etc. Once upon a time, the FHA and VA offered assumable loans with no qualification. All you had to do to take on one of these loans was fill out a form and send the agency about $50. Some FHA/VA assumable loans still exist, but not many. On December 1, 1986, the FHA stopped allowing nonqualifying assumptions, and on February 29, 1988, the VA did the same. If you can find an FHA or VA loan issued before these dates, it’s likely still fully assumable without qualifying.

The Lease/Option

My favorite method of property acquisition, leasing/option is wickedly simple and highly profitable, a combination that most investors really love. In a lease/option, you enter into what is basically a normal lease. The only difference is in the option. An option is exactly what it sounds like: it is an option to purchase a property at an agreed price within a certain period of time. When you put them together, you end up with a rent-to-own scenario. You pay the rent each month, the seller credits a certain amount of the rent to the purchase price. If you decide to buy the property within the option period, you simply hand the seller a check and get the deed. If you decide not to purchase the property, you still control the property for that period of time. Control is sometimes better than possession. If you control the property, you do not pay property taxes. You also don’t pay homeowner’s insurance. You don’t pay for renters insurance either, your renter/buyer does. You cash a check once a month, send the seller their cut, and keep the difference. And every time you place a new tenant/buyer on your property, you charge another option consideration (which is similar to a down payment but usually smaller and 100% non-refundable). The benefits of leasing/options are many and varied, but for this article, suffice it to say that it is a great way to acquire/manage real estate.

Please note that this list is by no means inclusive. There are literally hundreds of ways to buy or control real estate without your own money. These methods should get your creative juices flowing and help you create others of your own.