Is Real Estate Investing With No Down Payment a Good Idea?

You probably think the only way to get involved in real estate investing is with a sizable nest egg. However, you can buy rental properties with little to no down payment at all! As long as you’re smart about it, real estate investing with no down payment is a good idea—read on to learn how you can do it.

How Does It Normally Work?

Before we talk about how you can avoid a down payment, let’s look at the traditional method of real estate acquisition. Most lenders (such as banks) prefer you to pay a down payment of at least 20 percent of the purchase price of a property. If you don’t have the money to make this happen, you aren’t out of luck yet.

Use Seller Financing

Pulling off seller financing usually takes a strong negotiator, as this method involves the seller or previous owner taking over the financing responsibilities that usually rest with the buyer. The seller acts as a lender to you, allowing you to avoid going to a bank. This deal usually comes with a favorable interest rate or loan period for the seller.

Assume a Seller’s Mortgage

You can also assume the seller’s mortgage, which is referred to as buying “subject to.” That means you own the property but are subject to the seller’s mortgage. You may still need a small down payment, but it’s usually far less than that needed for a traditional sale. This is a great way to purchase distressed properties that need repair—but the seller needs to be on board. Now you know that real estate investing with no down payment is a good idea (as long as you do it right), get creative with your investments and start making money! If you’re on the lookout for investment properties in Atlanta, don’t hesitate to contact us. We’re here to kick-start your real estate dreams.