How Can You Buy Rentals Without A Down Payment? - The Smiling Heart

How Can You Buy Rentals Without A Down Payment?

This is a subject that is pretty controversial but it is something you need to be aware of. Many that start in this business are not actually qualified and cannot borrow money. Gordon Tang highlights that there are ways in which you can buy rentals without taking anything out of your pocket. Consider them so that you can actually buy rentals without having to deal with down payments.

Owner Financing

Although this could mean various different things, in this situation we refer to home sellers that want to sell houses simply to eliminate mortgages. The buyer is going to take the title of the home and the liens that exist. They get ownership and sellers still have to deal with loans. Buyers agree to pay off loans or make some payments on the behalf of the sellers. If this does not happen, lenders can wipe off buyers from the title and foreclose.

With such a transaction we see sellers taking huge risks so it is tough to negotiate. It is good for the buyer because of the lack of down payment or no need to qualify for loans. For the seller the only real advantage is that there is another person that takes care of their mortgage debt.


With this option you negotiate a lease on properties for a specific time, normally around ten years but times can vary. Rent amount is then set. From the moment the deal is signed you agree to purchase the property during lease term. Price is normally locked in at the current property value. After you are ok with the deal and everything is in place, you sublease. As time passes you hope property value increases. If this does not happen, you can re-negotiate or just let the considered property go. There is no obligation to actually buy. If property value increases, you have various options like selling option, reselling or keeping the property.

Bridge Loans

The main idea here is to find those properties that need much work to be done in order to make them great rental options. Prices are negotiated so that you can buy the home, fix it and then roll in closing costs while being at around 70% of ARV (after repaired value). You normally want to consider this specific strategy as you buy foreclosures that are bank owned.

After the home is bought, you repair it and get tenants in fast. This helps to refinance loans into permanent rental property loans.


There will be various cases when you cannot actually qualify for a loan but you believe you found some pretty good properties to invest in. If this happens, you can bring in partners to work together. Sharing deals at a 50-50 ratio can be quite profitable, without down payments. It does not really matter what strategies you want to use. Through partners you can reach potential as they can give you access to what you need so that you can close deals faster than anticipated.