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How do I buy an investment property with no money down?
Posted by: admin / Category: no money downHow do I buy an investment property with no money down?
You will have a tough time doing no money down. Even with investment property 1-4 family, great credit 90% loans, you would still have to pay some closing costs. Most lenders are going to want to see some skin in the game. If you don’t have cash into it, it makes you a higher risk since it isn’t property that you are living in.
July 29th, 2010 at 11:43 am
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July 29th, 2010 at 1:26 pm
Most banks aren’t going to go along with no money down investing.
If you rule out getting partners or money from a second mortgage on your home, that pretty much just leaves Seller financing.
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July 29th, 2010 at 1:41 pm
Well it depends on alot of factors. Mainly on the property. Is it residential or commercial???
You can get 100% financing on a building usually without a problem on 1-4 unit residential buildings providing your credit is fair and you earn roughly over 50 grand a year. You can even get 110% financing which means it covers the closing costs so you wont have to spend a dime of your own money. But in this case the seller will have to agree to a seller concession with the building value exceeding the selling amount.
If the property has over 4 units its then a commerical property which a completely different ball game, usually you would have to put 20% down.
Hope this answers your question.
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July 29th, 2010 at 2:18 pm
If you live at louisiana area. Try this affordable home with good financing program.
References :
http://www.purpledirt.com
July 29th, 2010 at 2:59 pm
You will have a tough time doing no money down. Even with investment property 1-4 family, great credit 90% loans, you would still have to pay some closing costs. Most lenders are going to want to see some skin in the game. If you don’t have cash into it, it makes you a higher risk since it isn’t property that you are living in.
References :
Sr. Loan Officer, OH
I’ve been in the banking & financial industry for 25 years
July 29th, 2010 at 3:12 pm
I bought my first investment property using a hard money lender. They charge high fees but can close quickly and will cover all expenses. I then refinanced a week later with a regular bank. Again, I was able to do this because the numbers worked.
I bought the home for $26,200 and it had an appraisal of $41,500 at the time. I cashed out some money on the refi so I not only paid off the hard money lender, but got about $8,000 cash back at closing….which was honestly a mistake. It sounds nice to get money back at closing but it does have to be paid back and it did create a small negative cash flow which will go away over time with rent increases.
Two Important points: FIRST: Hard money lenders are good but the rates are HIGH. Get the numbers and rates up front…don’t do anything until they give you this info.
SECOND: Make sure you can get a REFI LOAN to pay off the hard money lender in a timely manner. I was lucky that a bank would refi so quickly. Often a bank wants you to own the property for at least a year before they will refi…it’s called "seasoning".
Your other option is to buy the property "Subject To" existing financing. This is where you take over the property and promise to pay the mortgage for the people. The house stays in their name and you only morally bound to make the payments since there are no legal papers drawn up. Some sellers are so desperate they will go for this. I know many investors who do this. The one possible wrench in the works is the "Due on Sale" Clause. If the bank finds out they can call the note due and you have about 60 days or so to get financing.
I personally have not done one of these. If you do, make sure you have an exit strategy that will protect both you and the "previous owners". If there is equity, you should be able to find financing pretty easily. This is a very complicated strategy so I suggest you consult an attorney to make sure it’s even legal where you live. They tried to ban it in my state, but our group lobbied against it and we have won for now.
References :
Experience
Real Estate Investor
Former VP of Education for the Carolina Real Estate Investor’s Association
http://www.hotjohnnie.com
July 29th, 2010 at 3:24 pm
It deopends on how you work it. See here for more information
http://www.buy0down.com/
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July 31st, 2010 at 11:08 am
Epic post! I am definitely looking forward to reading more.