Real Estate Investment News & Blog

3 Ways to Buy Houses with No Money Down

One of the best things about investing in real estate is the ability to leverage the investment. Other investments such as stocks, bonds, mutual funds, and gold cannot be leveraged effectively .


The ability to leverage real estate and control assets for a fraction of the price is a huge advantage.

With real estate, you can buy an asset and leverage it by paying a bank a 25% down payment. For example, if an investor wants to buy a $100,000 duplex, bank financing will allow him to buy the asset with a $25,000 down payment.

The ability to leverage real estate and control assets for a fraction of the price is a huge advantage when investing in real estate.

But what if an investor would like to invest in real estate without putting any money into the investment?  What if an investor does not have extra money available to invest?  Is that an attainable leveraging goal for investors?

Yes! Here are three ways real estate investors can buy houses with no money down.

1. Subject To

How would you like to buy houses without needing to get a new mortgage? Buying houses “subject to” means that the buyer makes the acquisition without paying off the existing mortgage on the property.

The ownership of the property changes to the new owner, but the debt does not get formally assumed and does not get paid off at closing. The mortgage remains in the name of the person who originally took the loan when the house was originally purchased.

I was speaking to a good friend of mine in Colorado recently and he told me that he has now purchased over 100 homes for his rental portfolio. All acquisitions were made using subject to financing.  Subject to investing can provide opportunities to buy houses with no money down and without the investor needing to get a new mortgage.  These opportunities are available from motivated sellers who need debt relief or may be facing transfers.

2.  Lease Options

Control without ownership is the essence of tying up houses on a long-term lease with an option to buy. Think of this investing model as seller financing in disguise.

The real estate investor gains a long-term lease–at least five years in length. The lease also contains an option to buy the house at today’s price. An option provides the investor the legal right to buy but is not a legal obligation to buy the house. As part of the lease agreement, the investor gains the right to sub-lease the property to other tenants.

That is the beauty of master leasing investing. What did the real estate investor gain in this model?

The investor has control of a real estate asset with no money down. With this control, he can rent the house for the next five years and enjoy the cash flow.  He also has the right, but not obligation, to actually buy the house at any time in the negotiated option period.

3.  Joint Venture – Private Lender

Fire your bank and succeed massively! If you do not need to go to the bank, you will not need to put down a 25% down payment. Instead, find a private lender to put up all the money for your real estate deal and pay them a great return.

The financing with your private lender can be structured as traditional debt financing with points and interest, but no down payment, or you can structure a joint venture using equity financing.

With equity financing, the real estate investor does all the work but provides none of the money for the deal. Both parties in the joint venture agree to share the rental income and future equity. The equity can be split 25/75, 50/50 or how ever you work it with your private lender.

This market is the perfect storm for real estate investors. There’s a lot of distressed inventory available at great prices and a very strong rental demand. Don’t let the balance in your checkbook hold you back from investing. You can still invest in real estate with no money down. Structure deals directly with sellers, use private lenders, and be ready to capitalize now.

Please leave comments and questions in the comments area and consider sharing this with your social media contacts in Facebook, twitter, linked in, and pinterest.

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About the Author...

Jim Ingersoll is a real estate entrepreneur who has bought and sold hundreds of homes. He is the author of Investing Now and Cash Flow Now (both available at, and enjoys speaking and coaching others on how to obtain their financial freedom.

You can visit Jim at and

You can find Jim on Facebook and Twitter.


  1. Hilary says:

    Thanks Jim for the useful information!

    With regards to #2 Lease Option, does the investor gain the tax advantages (i.e. depreciation, etc.) or just the positive cash flow during the term of the lease?

    • Jim Ingersoll says:

      Hi Hilary

      Great tax question that I would prefer to send to a CPA to be sure. If you record the option properly you should gain equitable title and that could work out as described, but please double check.


  2. Annette says:

    Re #1 and #2 – What type of monetary incentive does the owner get for going along with these types of structuring arrangements?
    Re #1 – What keeps the lender from calling or acting on the Acceleration Clause upon transfer?

    Re #2 – What guarantee does the investor have that the owner will not obtain a second on the property during the lease option period? Are mortgage payments given to the owner to make payments, or does the investor make them directly on behalf of the owner? In some areas like Los Angeles and Orange counties rents are high already. How much more than covering the mortgage, keeping in mind market rents does an investor charge a tenant to rent and what would be the typical Option money required?

    With any of these scenarios, what percentage of equity should the property have to be considered a qualifying property for a good investment? So many properties carry secondary financing now.

    • Jim Ingersoll says:


      Good points.

      1. Every owner/seller is different. You may need to give them a little money at closing depending on their actual equity position. I made a Sub-2 offer last week which included a down-payment; but many times you may not need to provide one.

      2. With conventional bank financing, there is a due on sale clause to be aware of. Right now banks have their hands full with foreclosures and may not want to create more non-performing assets. However, if rates go up dramatically they may want to get rid of the low interest loans so be careful. If you buy in a trust that can help but the buyer and seller both need to be aware of the due on sale clause.

      3. I would not suggest doing it when there is a 2nd in place and there needs to be some equity and a good loan amortizing at a low rate in place to make a great deal.


  3. Holly says:

    Regarding option #1- does the new owner pay the mortgage payments directly to the bank or to the seller? Will the bank not call in the loan? This is illegal isnt it? I live in WIsconsin and am looking into a 20 unit complex that the owner is willing to finance but wants to avoid capital gains. What would be the best option for her. She is a widow in he late 70’s and the upkeep is too much for her. It has been on the market for over 2 years. She is asking 180K, cash flow is over 4K/month after expenses. what would be best for both of us? She owes 100K on the 20 unit and a 3 unit house that she lives in. (on the same note). She wishes to stay in the home for another 3-4 years nd then sell the 3 unit home and take her one time exemption for capital gains on that. Her first option was seller financing of downpayment and conventional loan for the rest but her tax advisor told her she would have to pay approx 20K in capital gains taxes by doing it that way. She is highly motivated and willing to do any type of creative financing as long a it is legal and ethical.

  4. Jim Ingersoll says:

    Hi Holly

    See my post above regarding the due on sale clause. It is not illegal, but you need to disclose it to the seller to sure you do not mislead anyone.

    Could you cover her capital gains with a down-payment?

    If you are careful with your documentation you could get a master lease with an option to buy in the future.

    Congrats on finding a deal you like and working to structure it so that everyone involved wins.


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