Can you acquire mortgages and loans without putting any down payment up? Or can you acquire a mortgage loan by putting very little down payment up? Yes, you can if you are an investor. It is not very popular, but others do it, so why not you?
Zero down is enigmatic as far as mortgages and loans are concerned. First, many people are of the notion that as an investor, you cannot get a mortgage with a zero down payment. That is not right because with some research, you can find great options and you can make some good business. For example, you can find a lease option buyer and then approach the seller. You can then pay the seller an option fee and have some left over, if you did your math right, or better yet, find the lease option buyer and don’t pay the seller any option fee. You will find that most of them do not even ask for it anyway.
Unless you can go out there and actually write an offer that will be accepted by the seller, then all of your work will have been for nothing. Thankfully, you can get handy tips about how to make offers that sellers will love. Yes, you can get great real estate offers on the Internet.
Usually, a seller will want at least 75% of an investment’s sale value in cash up front. Thankfully, lending institutions can guarantee you the 75% of the total appraisal value of the home, without a down payment and this makes it easier to pursue a possible transaction. Now assume that the home appraised in the high of 150, and you have to buy it at $110,000. You can do some simple math and see that the loan from the bank will cover the entire cost of the home and there…. you have a zero down home, just like that.
You will still need cash for rehab
Now that you know how you can get mortgages and loans without any down payment, does this mean that you do not need any money? Of course not. You see, old homes do need repairs and that could cost you quite an amount. Thus, you still need a reserve of cash to make the home presentable to the buyers.
Using the note buyer
This is simple math, but it requires a person who is not faint hearted. You find a seller who has put up a home for sale at $120,000. You split the selling price into two loans, say one at $90,000 and the other at $40,000. Then you can find a note buyer and sell them the bigger loan at, say, $85,000 which will go directly to the original seller of the property. No, you remain with $35,000 to pay. The good thing is that you did not put down any down payment. That is what Zero down selling is all about for investors.
Zero down mortgages for investors are possible, but there is a lot of work involved. With due diligence and proper calculations, you can pull this through. However, note that zero or little money investing do not mean that you should not have cash reserves. You still need some money for repairs.
Comments