How to Buy Investment Property with No Money Down

  • February 14, 2018
  • CRE

Many people with an interest in purchasing investment property may find themselves daunted at the thought of coming up with the initial down payment.  A lack of cash flow can seem like a big hindrance to a potential investor, but it doesn’t have to.  There are many creative ways to purchase an investment property with little to no money down.

Borrow the Money

One simple way to come up with the down payment for your investment property is to borrow it.  If you don’t have family members or friends who are willing to front the money, look for a lender who will allow you to finance it with a low interest rate.

borrow investment money

Utilize Your Personal Property

If you are a homeowner, this could give you some serious leverage to help you break into the world of real estate investment.  Consider taking out a HELOC (home equity line of credit) or a second mortgage against your own personal property to come up with the down payment.  Pay it back in affordable monthly installments.

Assume the Existing Mortgage

Oftentimes, the current owner of the potential investment property may be willing to transfer their current mortgage to the buyer.  This is particularly helpful if the seller needs to unload the property quickly or if it has entered foreclosure.

Figure Out a Trade

Another creative way to come up with a down payment for your investment property is to find out what you have that the seller needs and use it as leverage to help you secure a deal.  Anything with cash value can be potentially used as an enticing down payment.  This may mean cars, boats, jewelry, motorhomes, collectible items, or even land that you own free and clear.  If you’re not sure what you might have to offer, ask the seller.

Lease to Buy Option

When searching for the right investment property, look for sellers who are willing to negotiate a deal where you can rent with the option to buy.  Typically, the terms of this sort of deal will allow the buyer and seller to negotiate a monthly rent amount in exchange for the use of the property.  A portion (or sometimes all) of this monthly amount will be applied towards a predetermined selling price agreed upon by both the buyer and seller.  This may even afford the buyer time to build equity within the property so that they may secure their own loan later down the line.

Roll Down Payment into Purchase Price

This may be a little trickier, particularly if your credit is less than sufficient, but it is a viable way to secure your investment property.  While your interest rate will likely be considerably higher, if you have the credit to make this type of negotiation, it could be the answer you are looking for.

Use Your Skill Set

Much like your personal property can be used when negotiating a deal for investment property you can also put your skills to work for you.  If you have a tradeable skill of any value, consider using it to your advantage.  Examples of a lucrative tradeable skill set may be something like accounting, carpentry, legal services, et cetera.

Get a Partner

If financing an investment property is creating more of a headache than it needs to, consider reaching out to others with the same interests.  Pooling your funds with other investors is an easy way to take out some of the stress, as well as share the responsibilities that come with property ownership.  Obviously this can also come with its own set of problems, being that more investor’s means more ideas, opinions, and personalities.

Offer to Take on Seller’s Debt

If the current owner is selling their property to help pay off their own debt offer to roll their debt into the purchase price in lieu of a down payment.

Negotiate the Terms

When it comes to any type of investment property, negotiation is imperative.  If the down payment is too high, you may consider asking for an adjustment.  You may also offer a sale price that is higher than asking in return for the removal or negotiation of the down payment.

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Looking for Investment Property in the Baton Rouge Area?

Don’t let a lack of cash flow stop you from finding the perfect investment property.  Use the tips and tricks above to get creative with your financing and then, call us!  At SVN | Graham, Langlois, and Legendre, LLC, our team of dedicated Advisors has a proven track record of giving our clients a high quality experience from start to finish.  Take a look at our broad selection of properties today and call us to get started!