I know what you are thinking, there has to be a trick. Well there is. You need to know a few things about real estate investing before you can buy a rental property with no money down. You also need to know a few things about people, and you have to be willing to talk to strangers. Keep in mind, these strangers need your help.
The first thing that you need to understand is that you can buy a lot of property with no money, you don’t even need credit. What you do need is a fully functioning brain.
So, who would be willing to sell you a property with no money down? The answer is anyone who needs to get out of a property. There are several large categories of people who need to get out of a property. The most obvious group is landlords, but not just any landlords, landlords who are experiencing a problem. Some landlords aren’t very good at managing tenants. Any landlord who is having screaming matches with his tenants is a good prospect for a no money down offer. Any candidate who has had the SWAT team kick down the door to his rental property is a good candidate. Any landlords who has had to intervene in a domestic disturbance between his tenants is also a good one. Pretty much any tenant related personal issue that spills into a landlord’s life can cause them to become the proverbial “motivated seller”.
Don’t forget financial issues. A landlord who is doing a lousy job of running a rental property might be losing money every month. How long would you hold onto a property that has lost you money every month?
A landlord who has financial issues not related to the rental property might be willing to entertain a no money down deal as well. Divorce, job loss, and illness can all turn a landlord sour on a property.
There are also non landlord properties that you can pick up with nothing down. Think about anyone who can’t pay their mortgage. Technically you do need to put down enough money to make up the arrears on their mortgage, but it doesn’t have to be your money; or if you choose to resell the property, it doesn’t have to be your money for very long.
The entire point of this article is to get you thinking about people who might need to get rid of a property for one reason or another.
For the sake of brevity and simplicity, I am just going to give you one simple example of an offer that you can make on such a property. I will tell you that it is one of my favorites. I call it the debt takeover. You simply, offer to take over the debt on the property and allow the current owner to walk away. There are a number of different terms for this type of deal, most people will refer to it as a subject-too deal, because you are taking over a property subject to the existing mortgage. The same deal can be structured on a free and clear property with a little knowledge of how to write up the contract properly.
This deal requires no money up front, and your credit score is irrelevant. The really cool part is that your future tenant will make all of the payments for you, and this house will be as close to FREE as any house can be.