Real estate investing has always appealed to those searching for a business they will be able to start themselves and requires very little capital to get going. Many real estate gurus continue to promote no money down real estate property investing, but we also keep hearing about how much tougher securing a mortgage loan can be today. So are these no money down financing deals still possible?
Without question, the days of 100% no documentation loans from mortgage brokers and lenders have gone the way of dinosaurs and the loan programs that still exist are much tougher to qualify for due to tightened credit standards. However, there are other methods to finance your deals including owner financing and transactional funding.
Owner financing has been around for decades and was used by savvy real estate investors. For individuals offering this sort of financing it provides an easy and fast way to move properties, get top dollar on retail prices and enjoy, nice, above market returns and steady income streams. For investors and buyers it has meant not having to jump through hoops to satisfy the bank's underwriters and being able to maximize their leverage. Unfortunately with the quantity of distressed homes, underwater mortgages and cloudy titles on foreclosures it can be very difficult to know which owners to trust and you could find to your dismay that your monthly payments are being squandered instead of being applied to the underlying financing which can significantly threaten your ownership and equity stake.
In contrast, transactional funding offers usage of third party funds, which can finance 100% of the purchase price and subsequent closing costs. This isn't to be confused with hard money lending or private money lending. Transactional funding provides funds to acquire property, which will be flipped right away and for which you already have a buyer lined up. These types of loans are very easy to qualify for with no credit checks, income or asset verification or even appraisal requirements.
For those looking for real estate investing with no money down, transactional funding could be the missing ingredient you have been looking for. It means not having to come out of pocket for down payment or closing costs. Keep in mind, however, that some contracts will require an earnest money deposit or you having to get an inspection done, which will require you to cough up some money. This is miniscule compared to the potential profits that can be made flipping houses. You could get a family member to loan you the money or you could even use a credit card for this.
In summary, yes, you can still buy real estate with no money down and creative investors are using owner financing and transactional funding every day and are making a killing from the financial crisis.