How to Purchase Real Estate With No Money Down

Here are some methods of buying property with no money down.


  1. If you find a property that is free and clear, the seller might take out a whole new first. If he wants a down payment, get the first and a second that is an IOU. You can always take out a second on the property for repairs and use some of the money to pay back the seller. It depends on the bank. Some banks will do inspections for repairs 6 months to a year later and some will not. If you get a property that needs some cosmetic repairs you can spruce up the property and then get a second because it will appraise for more.
    • If you can get the seller to take a first for seven years, then you will be able to take out a second and use the money to buy another property.
  2. Seller financing is the most favorable. If you are in escrow and the bank wants more down, get the seller to take out a second. The more cash you retain, the more money you have for renovations and to buy other property.
  3. Buy a home with an FHA loan that is 3.5% down. Ask the seller to pay the closing costs. Ask the seller or a relative for the down payment. Write a letter to the banks saying that with so many banks going bankrupt you were saving the down payment in a mattress.
  4. Trade in a car as a down payment.
  5. Use credit cards to raise the money needed.
    • You can also use credit cards to spruce up the property and rent vacancies after the property is in your name.
  6. Ask the seller to take back a second for repairs. You can always tell the seller that you will be able to get a second after you own the property.
  7. Ask the seller to give you the money and you will give him a note on another property.
  8. Get a friend to loan you the cash that is secured or un-secured by Real Estate.
  9. Take a loan out against your 401k.
  10. Get a “Hard Money” loan.


  • Always try the seller first, friends and relatives second, banks third and hard money last. This way you get the best terms and interest. The Seller is the most motivated and hard money lenders are the most likely to charge a very high interest.
  • One to four units require the least money down and have fixed interest rates. Five or more units require a higher down payment and the Banks will only give variable loans.


  • Don’t buy a property where you have a big negative cash flow. Many owners don’t budget enough for roofs, vacancies and maintenance. For small units you must budget at least $100 per unit per month for these. For larger units you must budget at least $200 per unit per month.

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This entry was posted on Tuesday, November 29th, 2011 at 10:54 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.