The unique ability to recognize and take full advantage of the monetary funds of others is the cornerstone of success when it comes to real estate investments. Learn how to engage in the process of buying a rental property with no money down.
If you are a new and/or financially limited investor, you will likely be highly attracted to the fact that you may obtain real estate without having the financial backing and/or credit that is normally required to do so.
By simply utilizing the monetary resources of others, you have the ability to liquidate cash that you do not possess in order to save what cash you do have; therefore, having more – ultimately – to invest in future endeavors.
There is really no such thing as having to put absolutely no money down when it comes to real estate investments. When we speak of buying rental property with no money down, we are referring to using money from sources other than your own to do so.
You likely have a passion for real estate, but, do not have the actual money to lock into purchasing the property that you desire. If this is so, you are in the right place. Here, you will learn the secrets of all the professionals who are able to buy rental property without putting their own money down.
Integrating the Down Payment into the Overall Purchase Price
The first step to buying rental property with no money down is to try to integrate the amount of money that you would normally pay down on the property into the overall purchase price. Naturally, your ability to succeed in this endeavor will depend heavily upon your credit score and your personal lending history.
If you have a high credit rating and your financial history is approved, many lenders will allow you the ability to finance up to 100% of all of the price of the rental property.
It must be understood, though, that this will result in higher monthly payments and higher interest rates; however, if you intend to rent out quickly, this should not have a large detrimental effect on your overall margin, in terms of profits.
Mortgage Transfer
The next method of buying rental property with no money down is to encourage the current seller to conduct a mortgage transfer into your name. This works best with those that need to sell quickly and/or those that have no issue in working directly with you.
Basically, you and the seller would need to go to the mortgage company or the bank that currently holds the mortgage to do an assignment of contract. Immediately thereafter, you would close the sale and would take over the remaining payments left on the property – without having to put a penny of your money down.
Consider an Installment Plan
When buying rental property, you may have the option to create a payment installment plan. This would allow you to go ahead and purchase the property but you will have a separate plan worked out to pay off what the seller wanted down over a set period of time.
While you will still be paying the down payment that the seller wants, it allows for the opportunity to obtain the property first and pay later.
Investment Partnership
If you are looking into buying rental property with no money down, you should consider opting for an investment partner that has the financial means to put up the cash needed and share the equity with you.
Essentially, your partner would put the money down and you would pay back your “half” in monthly payments. Once you have paid back your share, you can split the rental proceeds associated with the property.
Choose Rent-to-Own with a Buying Option
If you want to engage in buying rental property with no money down, choose properties that are rent-to-own with a buying option. Essentially, you would rent out the property for a certain amount of time. During that time, you could save up money and improve your overall credit rating.
At the end of the pre-determined amount of time, you would then officially purchase the property by obtaining a loan and/or by paying cash – depending on how much you were able to save. In many instances, these properties will designate a certain amount of the rent that you pay towards the purchase price at the end of a set period.
USDA Loans
The Department of Agriculture Rural Development office in the United States has a goal of populating areas of the country that are unpopulated. As a result, they developed USDA loans. These loans provide mortgages to people and – in most instances – those individuals do not have to have any money to put down. In order to qualify, the property must be in an area that has a population of no more than 10,000. You must be considered to be “low income” or “moderate income” to qualify.
As you can see from the information contained in this guide, there are many different ways you may achieve success at buying rental property with no money down. In addition to the options that we have outlined here, there are other options. Examples include using home equity on a property that you already own, engaging in owner financing, a loan assistance program that helps those that do not have the funds to put down on a rental property, trading property with others in the real estate market, and private loans.
When buying rental property with no money down, you are buying with the funds of others. It will allow you to keep your money and pursue a career in real estate. The return on investment is typically immediate and fast. It is best to have a property manager to assist you with this task.
For more information on buying rental property with no money down, legalities, and other real estate questions