How to Buy Your First Rental Property with No Money ($0 Down!)

Do you dream of owning rental properties, achieving financial freedom, or retiring early? Don’t let money get in the way! In this guide, we’re going to show you exactly how to buy your first rental property with no money down. There are more ways to get around a large investment property down payment than you might think, so keep reading to learn more about our favorite strategies—including one that pays you to buy a rental property!

Summary:

• Rent to Retirement’s $0-down strategy is the number one way to buy a rental property with no money down.

• Getting seller financing, finding a partner, and assuming a mortgage are a few of the many ways to buy rentals with no or low money.

• There are a few downsides to no-money-down financing, including lower purchasing power, higher interest, and less starting equity.

1. The $0 Down Rental Property Strategy

Rent to Retirement is the only turnkey rental provider on the market that allows you to close with a 5% down payment on new build investments. But that’s not all. You may also qualify for a price reduction of up to $50,000, which can either lower your purchase price OR be received as cash back at closingthat you can use as cash back at closing. This would cover your down payment, and now, you’ve picked up a brand new rental property for $0!

How It Works

Want to know how to buy your first investment property with no money down? Here’s all you need to do to take advantage of Rent to Retirement’s $0 down strategy:

Choose Your New Build Rental Property

Rent to Retirement has dozens of turnkey rental properties available in some of the best states to buy rental property. Because these properties come with management and tenants already in place, you can invest in them from anywhere in the world. Choose the type of new build you want in a market you like!

Choose Your Incentive 

Rent to Retirement allows you to buy a new build-to-rent investment with as little as 5% down but with a massive incentive (of your choice) to offset your down payment. For example, let’s use a $300,000 new turnkey rental. With our 5%-down loan, you’d need just $15,000 to close, but thanks to our special offer, you can choose to:

1. Get up to $30,000 back at closing (you get PAID to buy the rental!)
2. Take up to a $30,000 price reduction (walk-in equity!)
3. Use up to $30,000 to buy down your interest rate (more cash flow!)

Walk Away with a New Rental for $0! 

Finally, close on your property, like you would with any other property. Just like that, you’ve bought a brand new turnkey rental with effectively zero dollars down!

2. Ask for Seller Financing 

Some owners who don’t have mortgages, are struggling to sell their homes, or are looking to avoid paying a large capital gains tax from the sale might agree to seller financing. In this scenario, the seller acts as the bank, and you make monthly payments to them until the loan is repaid.

Seller financing isn’t common, but if you can find a seller who will agree to terms, you might also be able to negotiate with them to give you a larger monthly payment over a large down payment.

3. Use Your Home Equity

If you own a home and have been diligently paying down your mortgage, you could tap into your home equity and use it to help fund your next rental property. You can achieve this by taking out a home equity line of credit (HELOC), doing a cash-out refinance, or getting a home equity loan.

Looking for no or low-money down rental properties?

4. Assume a Mortgage 

Assumable mortgages allow you to take over a seller’s loan, including the interest rate and terms. This means you may not need to come up with any kind of down payment; you simply pick up where the seller left off with their monthly mortgage payments. Just make sure there is no due-on-sale clause in the loan terms!

Also, keep in mind that you will need to put down the difference between the mortgage and the purchase price, so this is only a no-money-down strategy in rare cases.

5. Find a Money Partner 

Do you have time or experience but no money? You could partner up with a busy investor who has the cash but not the time. You do all the work, like finding the property, managing any renovations, and finding tenants (unless you hire a property manager). They provide the one thing you don’t have—the down payment!

6. Buy a New Build

Since many build-to-rent investment properties appreciate as they’re being built, this built-in equity could effectively lower or eliminate your down payment. Rent to Retirement has plenty of properties, including new builds in high-appreciation markets that you can buy with low or no money down. Check out our turnkey rental properties for sale here!

Get PAID to buy a brand-new rental property!

7. Rent Out Your Primary 

If you already have a primary residence you’ve been living in for at least one year, congratulations—you can now turn it into a rental property! Tenants or guests will pay you rental income so that you can continue paying down that mortgage. Meanwhile, you can get financing for a new primary residence (with lower down payment requirements)!

8. House Hack (with a Seller Credit!)

House hacking is an investing strategy that allows you to earn rental income by renting out a room or unit in your house. Depending on how much you charge for rent, this could cover most (if not all) of your monthly mortgage payment!

The best part? Because the property is still your primary residence, you can often finance this property with as little as 3%-5% down. Plus, if you can negotiate a seller credit at closing, it may eliminate some (if not all) of your down payment.

9. Use a Hard or Private Money Loan

A hard or private money loan is one you borrow from a private investor or organization rather than from a traditional bank or credit union. These loans are typically used for flipping or BRRRRing (buy, rehab, rent, refinance, repeat) houses since they have shorter terms and higher interest rates. You shouldn’t use them unless you are confident you can refinance into long-term debt or sell the property! 

Getting a hard money loan to cover 80%-90% of the purchase price and rehab costs and a private money loan to cover the remaining 10%-20% could get you into your rental property with little to no money down. This is a very advanced strategy that is only recommended for experienced investors!

Is It Smart to Buy a Rental with No Money Down?

If you’re buying a solid investment, putting no money down rather than waiting to save up for a down payment can be a savvy move. Just be mindful that this may limit your purchasing power, cause you to pay more in interest, and give you less starting equity in the property. What’s more, some strategies, like using hard or private money, are much riskier than others.

On the other hand, Rent to Retirement has low-maintenance, new construction homes with unbeatable incentives for investors!

Buy a Rental Property with NO Money!

Now that you know how to buy a rental property with no money down, it’s time to choose your strategy! Some are very risky, and others require at least some cash to get started. This is why Rent to Retirement’s $0-down financing for new builds is the best option you’ll find.

You’ll get to pair our industry-best 5%-down loan with an offer that gives you up to $50,000 back, right off the bat. No other loan or strategy holds a candle to our incentives for new build, turnkey investments!

How to Buy Your First Rental Property with No Money FAQs

How Much Money Do I Need to Start Investing in Rental Property?

Unless you know how to buy investment property with no money down, you will need roughly 15%-25% for a down payment. You should also ensure you have enough cash to cover any closing costs and reserves, even with many no-money-down strategies.

Is It Possible to Start in Real Estate with No Money?

Yes! Although many lenders require a down payment, there are several solutions—like Rent to Retirement’s $0-down strategy—that allow you to buy a rental property without putting any money down.

What is the 50% Rule in Rental Property Investing?

The 50% rule states that you should expect your operating expenses to be equal to roughly half of your gross income (rent). This isn’t typically the case for new builds since their maintenance expenses are so much lower!