- Image via Wikipedia
Getting started in zero down real estate investing can be a challenge. Sometimes finding a no money down property is the only way a beginning investor can get started. They only need one good deal to get their feet of the ground. Often times it takes a lot of work to find that perfect deal. On rare occasions a great no money down deal can fall in your lap, but again, that is rare.
If you can get creative you might be able to work out a deal where both parties can get what they want. The investor still gets his no money down property and the seller gets the property off their hands quickly. The most basic of no money down deals is the owner financing strategy. Basically the investor negotiates with the seller, who owns the property outright, to carry financing of the property. The owners take a monthly payment from the investor for a specified period of time. That is pretty much as simple as no money down, owner financing gets. As mentioned earlier, it is rare that a deal like this will fall into your lap. Often times a down payment will be required by the seller to close the deal. If you have the money, that is great, otherwise, keep looking for see if there is another way to work the deal.
Another possible way to get into a no money down property is to assume the seller’s existing loan and have the seller to carry back their equity in the form of a second loan. This one can be more of a challenge because you have a third party that you have to please. It might be difficult to qualify for the loan and you will have to pay to assume the loan. The lender will want to make sure that you will qualify and will be worth the investment. The other reason this is not as attractive an option is that you have more risk involved. The new loan will be on you, not the seller. The key will be to make sure that the loan is structured properly so that the numbers are good enough to make the property a worthwhile investment.
It would be ideal if you could use “subject to” financing deals (as mentioned earlier on this blog) and let the owner take back a loan. This is beneficial because you won’t have fees that are associated with traditional loans and you don’t have to pay to assume the loan. The other benefit is there wouldn’t be a waiting game. You could take over the property almost immediately.
As you can see there are a few creative ways to buy real estate with no money down. There are other ways as well. Use your imagination and try out other strategies to see if you can get a favorable no money down deal. That is the beauty of no money down investing, you don’t have a strict set of guidelines that you have to abide by. The more creative you can be, the more effective an investor you can be.
