How to finance an investment property with no money down?
OK… So you found the perfect property that you want to invest in…. Now, how do you buy it with no or very little money down…STOP
Here's the most important thing… We have to figure out what the spread is. (spread equals discount below market value) There's a spread right? If a property has a market value of 100,000… Anyone can pay 100,000 for it… The true real estate investor is going to get it for less. The degree of ”less” is the spread or profit for you, the investor. If you're paying market price for a property, this is probably not the program for you.
Let's figure out how you can buy a property with no down payment.
What is Rehab Financing or Hard Money Loans?
Rehab Financing is a loan targeted exclusively real estate investors specifically for the rehabilitation of properties in need of repair.
What is Your Down Payment on a Rehab Loan?
Typically and standard in my company – You make absolutely no down payment as long as your loan amount is no higher than 65% of the ARV [After Repair Value].
Figure out how you can buy a property with no down payment.
What Properties Don't Usually Qualify For Rehab Financing?
Residential owner-occupied properties.
Typical Financing Terms?
It depends on your experience and the property. For example you have a “Balloon Loan” which are usually 12 months. Amortizations are flexible. Sometimes 20 years. Sometimes interest only payments. Or sometimes no payments at all. Very investor friendly.
Can the Deed be Held in a Corporate Name?
Yes. You can hold the deed as a corporation, LLC, partnership or individually.
So here's a practical example of a rehab loan….
An investor can buy a distressed single family property for $45,000, He believes that he can fix it up to salable condition for $40,000. When the properties done, it should be able to sell for about $145,000.
In this case… a rehab financing company or hard money lender would loan the borrower up to $94,250 which is 65% of 145,000!
In other words…
| the 45,000 to buy the property | |
| the 40,000 to fix it up | |
| plus any money for closing costs… |
He wouldn't need any of his own money!!!
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