If you want to get into real estate, for personal or investment purposes, but you just do not have the cash to get you started. Purchasing real estate is still possible even without a down payment.
Below are a few techniques, provided the seller is willing to negotiate and has a genuine interest in selling the property as soon as possible.
Buying with no money down.
The simplest method for real estate investment is to take over their mortgage payments. This is called assuming the mortgage. Naturally, you will need to be approved by the original lender to assume the mortgage. If you cannot be approved for an assumable mortgage, you may also try a subject to assumption mortgage, which means that you make the monthly payments while the property remains in the seller’s name.
What if the seller asks for a spot cash?
If the seller wants a spot cash to recover his or her initial expenses, you can negotiate to amortize directly to the seller the spot required. Usually seller agrees on this arrangement if they are in a hurry to dispose the property or they can no longer continue the amortization. You can also look for other private financial lenders to take care of the initial spot cash.
Buying a foreclosed property and finance your down payment.
After appraising a foreclosed property and you think that the price is low, it is on good location, has little improvement needed, has high rental value, and eventually the price in the area will go up, you can go ahead and look for a second lender to finance your down payment. You should rent out the property immediately so you can easily pay your monthly amortization.
A majority of mortgage lenders want to make a good investment. While your local bank may still shy away there are plenty of financial lenders that would love to make a deal and finance your loan.
Finance companies like real estate. The mortgage is usually based on 60-80% of the value of the property, so as long as they know they will get their money back in the value of the property if you default. Complete the deal with a second mortgage created with the seller.
As you can see, there are ways to invest in real estate as long as the buyer and seller work together.
But banks know that the safest way to invest in property is at least you should have a 20% equity and at least another 10% standby personal equity for maintenance.