Buying Rental Property Without Any Down Payment


Undoubtedly, having the required funding for investing in rental property will help succeed in the investing career, but it is not the only way. You can consider different options for your investment with zero down payment. For instance, when you are on a low budget or funds, then you can go creative while purchasing real estate. Here are some of the top options you can consider for investing in real estate with no money down.

Buying real estate with no money down- What does this mean?

In general, the lenders like banking institutions ask for a certain down payment from the borrowers when they offer to purchase a rental property. This typically is about 20% or more than the purchase price of the property. Therefore, it is the amount that can sum up to tens of thousands of dollars just for beginning your first investment in the rental property.

When an investor is proposing to purchase a rental real estate property with no money down, then this means they are putting very little down payment into the investment or none. In some cases, the investors make use of other people’s money for making down payments. It is a creative financing option meant to eliminate the requirement for a down payment altogether. However, with this, they have to put a little or no amount from their own pocket.

It is a popular option because when there is less money invested from one’s side, then the return is expected to be higher. Having said that, real estate investors make use of different methods for making investments with no money down. Here are the top options.

Make the primary residence rental

There is no specific thing like your home needs to be a single-family home. House hacking is a common means for purchasing multi-family properties to live in as a primary residence. At the same time, the other remaining sections can be rented out. It is a reliable method for real estate investors who wants to start investing in rental properties with little money. In addition, there is an option for you to make use of a down payment assistance program to purchase the property for as little as a 3.5 % down payment.

Leverage the property

Investors with high credit scores have an option to benefit from the property itself. For this, you have to leverage the equity of the property. But herein there is a need to get a home and an equity credit loan. It is a special type of financing using which the borrowers have the option to get a loan or a credit up to 75% to 80% of the equity present in the property. However, the final rate is determined with a formal appraisal.

Use seller financing

Popularly known as owner financing, it is an additional means of financing wherein the owner of the property or the seller holds the financing for the buyer. The owner herein acts as the lender for the buyer to avoid the hassle of visiting the banking institutions for traditional financing. The buyer then has to pay the money over a period of time-based on the repayment terms as mentioned in the formal agreement.

Some of the sellers know exactly what they want to hold from the financing, like down payment, specific interest rate, etc., while the others can negotiate. If you can negotiate and determine the needs of the sellers, then you can go for financing with no money down. However, this usually works when the need for the desired sale price is more than the down payment the borrower is expecting.

Assume a seller’s mortgage

It is yet another great option for using a zero-down payment for purchasing an investment property. Herein the buyer has to assume the current mortgage of the seller. This means that you have to purchase the rental property based on the terms and agreements of the current mortgage of the owner. With this option, the borrower needs to make payment in small down payment. However, depending upon the seller’s needs, it might be possible to get a loan for no money down.

For instance, if the worth of a property is $200,000 and the current mortgage amount left is $120,000 for 12 years, then as a buyer, you will have to pay about $20,000 for selling the property, and then you will take over one $180,000 mortgage which you will have to pay monthly to the bank.

Rather than looking for alternative options of financing from other resources, the investor benefits from paying the loan amount depreciation schedule.

Purchasing the subject is a creative and reliable way to invest in distressed properties. However, this isn’t always the option. Based on the needs of the lender, the loan can be assumable. In some cases, a lender might include a due on sale clause. This means that the entire loan balance will be transferred to the buyer. However, only some leaders do this.

Hard money loan

Commercial real estate hard money lending is a great financing alternative. It is generally used when the investor has no option to acquire a loan through traditional financing. The borrower here can secure funding for the property up to a certain amount of the property based on the current value, along with the inclusion of the renovation or repair cost of the property in the loan.

You will get the hard money loans at a good rate by negotiating for a low price. Also, there is a possibility to put in zero down payment for the purchase. ā

Hard money loans typically are short-term loans that range between 6 to 18 months. However, there is a higher interest rate than the other options. So this method of purchasing a rental property is typically the best when you have good credit and you are hoping for a cash-out refinance once the property is renovated.

Partner on an investment

Another common method investors choose to invest in properties with zero investment is by bringing in other people for their money. You can look for private commercial real estate lenders or partners who are willing to invest in a property. This helps get the necessary funds for the purchase without worrying about the interest. The amount will act as a down payment but for this, the new partner will expect a return on investment. You can either choose your friends, family, or colleagues as your partner.


Many successful real estate investors use different techniques to invest in real estate properties with no money down. When you have the experience, you can succeed with this method. However, when you are new to real estate investing, you will need proper assistance to succeed. So better to take help from a professional company like Private Capital Investors. They will help you here by bringing forward some great deals to ensure that you have the option to invest in the property of your liking. Besides, they will also analyze the investment opportunities to see which strategy will work best for you. Remember purchasing rental real estate property with no money down is not easy. However, with professional assistance, it will absolutely work, and you will have the option to succeed.

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