This topic always stir up some controversy and justifiably so but when you’re young and broke with no credit you do what you can. This is where you buy real estate when you’re not qualified to borrow money. All that being said, buying property without money is entirely possible, that doesn’t mean you should go into a real estate deal with no money. Getting too aggressive can come back and bite you if the market changes. Be very wary of changes in the market and keep one eye on surviving a down turn while at the same time building wealth. Now that that is over with let’s get into the four strategies to buy property with no down payment.
Owner Financing
Owner financing can happen in a lot of different ways, but you can assume that the owner just wants to be rid of the property and out of any financial obligations to it. Essentially with owner financing the owner of the property allows you to pay the down payment or balance of the selling price after the mortgage on payments. He is effectively the bank for a second mortgage. He can put a lien on the home if you stop paying his portion of the total mortgage costs.
Bridge Loans
For a bridge loan you are going to need to find a property that needs a lot of work but will be a good investment property. You need to find a property that you can buy, fix, include the closing costs and still be below 70% of the value of the property in good condition. You need to find a really rundown house that is selling dirt cheap. Often it is used on properties that have been foreclosed. Once you have fixed everything and gotten some tenants into the property then you find yourself a traditional mortgage.
Find a Partner
This is exactly what it sounds like, you either find a partner with deep pockets or one that can qualify for the mortgage loans. You can split the profits 50/50 or anyway that works for you.
Lease Options
Many real estate investors will use this method when they are first starting out to generate some cash flow. You negotiate with the seller to lease the property for a specific length of time at a fixed price. You have the option to purchase the property at a fixed price at any time during the leasing period, close to the asking price. The idea is to sublet the property covering your carrying costs. Hopefully during this time period the property goes up in value and then you resell.
