Buy Real Estate With No Money Down

October 12, 2007 by

no money downAnyone can buy real estate with no money down. All you have to do is offer a high enough price and make sure the seller gets some cash at closing (but not yours). Do that and someone will say yes to your offer. The problem, of course, is that just getting real estate without spending your own cash isn’t all you want. You also want a deal that makes sense.

This tends to be glossed over by many who promote zero-down ways to buy real estate. If you are buying a home for yourself, so what if you get in with nothing down. You also want to be sure that it makes more sense than the alternatives (renting, waiting, lease-option, etc.). If you are investing in real estate, you want a property that will have cash flow or can be sold for a profit. With those criteria in mind, here are a few ways to do it without your own money.

No Money Down – Starting With Land

One of the easiest types of real estate to buy with nothing down is land or small lots. In many areas of the country it is common for sellers to sell these properties with a small down payment or none at all. Of course, one of the reasons they do this is because it is an easy way to get more for the land. I once bought a piece of land for cash and resold it in weeks for 30% more, because a lot of buyers could afford my terms: $250 down and $100 per month. So be sure that you are not paying too much.

“Too much” doesn’t necessarily mean paying a lot over “market value” however. It is determined by what you will do with the property. For example, if you have no other way to buy a small lot, and as a result of the easy terms offered by the seller you pay $12,000 for a lot worth just $9,000, is that too much? Not if you will later put a modular on it and make a $21,000 profit selling the package.

Now you might notice that many of the lots and parcels of land for sale are not offered with no down payment. Most sellers will at least want something at closing, even if it is only $1,000 down on an $8,000 lot. So how do these become “nothing down” deals? By borrowing for the down payment. In the above example, where you eventually make $21,000, what if you borrowed the down payment on a credit card at 18% interest, and it took a year to do the deal? Then you would make $210 less ($30 cash advance fee and $180 interest), or just $20,790 profit.

Land is also a way to get into a home with no money down. When you buy real estate this way, you can pay for the lot over a few years, and then use it as the equity necessary to get a home loan. many banks will loan you the money for a modular or stick-built home if you already own the land free and clear.

100% Financing

If you have a good credit score, you might still be able to get a 100% mortgage loan. They are getting less common now (late 2007), but I still see an occasional advertisement for them. Alternately, you might find a lender who will loan 90% and still let the seller finance the other 10% on a second mortgage, meaning none of your cash is necessary.

If you are investing in real estate, you might get 100% financing from a “hard money” lender. These lenders charge high fees and high interest, but the idea is that you use them for high -profit deals that make it worth it. Other investors may put up the money for the down payment and repair costs on a fixer upper project, if you find the right deals. This can be at a high interest rate, or for a share of the profits.

Buy Real Estate From Motivated Sellers

If you stick to properties that have highly motivated sellers, there is usually a way to buy with no money down. For example, a seller might sell his $90,000 house to you with only $3,000 down if you offer him $95,000 and a good interest rate. You can borrow the $3,000 of course (or even a little more to cover closing costs, if you want nothing at all into the deal).

Sellers have been known to take cars or other pieces of property as a down payment. They may let you buy with two mortgage notes, one for 20% and the other for 80%, one of which they’ll immediately sell to get the cash they want. To buy real estate with no money down, just look for a way to get the seller (and the lender, if necessary) what he needs – without using your cash.

Popularity: 10% [?]



Related Posts


14 Responses to “Buy Real Estate With No Money Down”

  1. Les Oreck on November 18th, 2008 10:49 am

    I have been investing in Jackson, MS for about a year and a half – and was facing a headwind the whole first year. Banks were changing their loan criteria one day before a loan was to close. Comps were 15% lower a month after I’d buy a property. And so on.
    But since the middle of Summer ’08 this has all calmed down. Stopped actually. Buyers are getting loans, comps have been steady for 6 months, giving the sense a plateau is at hand.
    Jackson was hit very early on in the current foreclosure debacle and getting that sorted throughout the local market took time. But at this point – if 6 months of steady data is an indication – it seems to have stabilized.
    And it would be great if this was a leading edge indicator that the not-too distant future could see the same nationally.
    We have a lot of information on investing in Jackson on our website. And I’d like to invite all interested investors to check it out and review our current listings in the process. http://www.irvinehillsllc.com. Good cash flow, good equity, good prices.
    Best of success with all your deals.
    Les Oreck

  2. Woodstock foreclosures on February 14th, 2009 11:06 am

    I imagine that these days are now gone. I think that is a good thing.

  3. Jeanette on April 4th, 2009 3:16 pm

    It is encouraging to see how things have turned around in your area. Hopefully this is a good indication of how the market as a whole, will revive itself. I also know of a good website if you are starting to feel comfortable in purchasing affordabe land. Check out http://www.sigmaprop.com/landforsale.php. I think you’ll be pleasantly surprised at what’s out there.

  4. real estate philippines on April 6th, 2009 8:32 pm

    Nice! thanks for this useful post.. Having a real estate with no down payment is a great offer…

    -david

  5. Staten Island Real Estate Agent on August 5th, 2009 5:52 am

    There are many deals out there for those whom wish to put zero-down. You just need to understand the beast before you jump in. Read as much as you can on tactics and strategies on investing with zero down.

  6. Moshe Cohen on August 8th, 2009 7:39 pm

    No money down investment means that small decline in the market and you have negative equity, Reward can be good but so is the risk.

  7. mortgage loan modification on August 13th, 2009 1:38 pm

    If you buy a property out in the boondocks you can possibly get a 100% loan through USDA, also VA loans are still 100%…

  8. Nick Johnson on September 28th, 2009 4:50 am

    Since we experienced a downturn, many of those properties that were bought with no money down are now and have been foreclosed. Now that we’ve got lower interest rates buying a house with no money down will become more relevant once again as homeowners become more educated in their options.

  9. Scott Nachatilo on December 13th, 2009 8:38 pm

    You can do that by finding a good financing house loan where they can absorbed all the cost and price of the property you are buying. But you have to have a good credit background and a good income to cover the monthly amortization.

    Scott@Financially Free Landlord

  10. Oliver on January 7th, 2010 3:43 pm

    Its all about partnering with the right people when your starting. If you go out and find a great deal, finding a money partner won’t be hard. Go get a great property under contract, then partner 50/50 with a money partner. You a couple deals like that and soon enough YOU will be the money guy/girl.

    Oliver

    Follow me on Twitter:
    http://twitter.com/OliverGraf360

  11. Elyza on January 11th, 2010 12:55 am

    You just came out with an interesting post.

    “your saying that you can buy real estate even with out money down, all you have to do is offer a high enough price and make sure the seller gets some cash at closing ” this is really makes sense.

  12. dzoyce on November 23rd, 2010 10:59 pm

    this is a great offer.,. nice post… i also have here my idea.. a foreclosure that is really cheap.. got to this site Cheapest Foreclosure for more
    It’s free to join and they actually own their homes and not just a broker.

  13. Longboat Key homes for sale on August 30th, 2011 5:48 am

    These are solid things that should be a top priority for homebuyers.

  14. Nadine Muench on November 6th, 2011 8:44 am

    yeah it is true. buying a house with zero down payment can be an advantage to home buyers but make sure that you know what you are getting into before you dive into it. Escondido Homes for Sale

Got something to say?







Recent Posts


css.php