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No Money
Down Real Estate Investing
How does no money down real estate investing work?
Made famous by Carlton Sheets in his no money down real
estate infomercials the catch phrase “no money down real
estate investing” has attracted millions to real estate
investing on the promise that you can invest without money or
credit. The good news… no money down real estate investing
is real!
But as much as we hear about “no money down real estate
investing” it seems that nobody is willing to tell you what
no money down really means or how to actually buy with no
down payment unless you invest in their real estate
programs. Let me briefly explain how no money down real
estate investing works.
The common misconception with no money down is the
perception that the seller is not getting any cash when they
sell the property. There are many ways to structure no down
payment deals and most often the seller is getting cash,
even if it is not provided directly by the buyer.
- No Money Down Real Estate Investing Example 1
For instance the buyer could have no down payment and
the seller could receive their entire purchase price in cash.
This commonly happens in a
wholesale transaction where the buyer finds a property and
is able to buy it at a substantial discount and fund the
purchase with money from a private money or hard money lender.
This type of no money down real estate investing is done
all the time and is commonly called wholesaling or flipping.
- No Money Down Real Estate Investing Example 2
Another example of a no down payment deal can happen
when an investor purchases a property “subject to” the existing
financing. This means the investor is taking over existing
financing without having to qualify for the loans (note: banks
have a due on sale clause in their loan and have the right to
call the loan due but in practice this is rarely done because
banks are more interested in receiving timely payments than
calling loans due).
A seller might have a property worth $200,000 and they owe
$185,000. Realizing if they would have to pay money to sell the
property after taking into consideration closing costs and a
Realtors commission they decided to sell the property to an
investor willing to take over the existing payments “subject
to.” This is an example of no money down real estate
investing.
- No Money Down Real Estate Investing Example 3
A seller owns a property free and clear and is willing to
sell the property on owner terms. Most sellers are not
interested in no money down deals if they are carrying
all of the financing. However, if a property is in need of
extensive repairs sellers understand the property will not
qualify for convention financing and may be willing to carry all
of the financing if an offer is properly presented.
One way to accomplish this goal is to offer a wholesale offer
for cash or an owner terms offer for a higher amount where the
seller finances the entire purchase price. In real estate all
things are negotiable so there are many ways to create win win
situations.
No money down real estate investing is real! A great
book, “How To Get
Rich In Real Estate Even If You Are Dead Broke!” goes into
great detail on wholesaling, purchasing “subject to” and other
investing techniques. A must read for investors of all levels. | 
