3 Strategies To Buy Property With No Money Down

I’m often asked by investors who are starting out, if it is possible to buy property without any cash? The good news is… it is! The bad news is, funny enough, it’s not as easy as it sounds. I’m going to share here three strategies that anyone can use to make money from an investment property without having any money in the deal.

Strategy One – Someone Elses Money

It’s interesting that a lot of investors I have known, spend a lot of time and money trying to learn and apply sophisticated techniques to buy property without using any money (due to limited personal finances), and they fail to consider what may be the easiest solution – to partner with a friend or family who is keen to help finance the cash part of their deal (eg may be 25% of the price needed as deposit and closing costs).

If you have a parent, or sibling or co-conspirator who has cash (and you don’t) then partnering with someone like this may be the easiest way to get started. (This is called a Joint Venture (JV) ). It doesn’t hurt to ask – they might say yes!

My advice is not to enter into this form of partnership lightly though – there is a lot to consider, and you will need a good solicitor to draw up a partnership agreement, as invariably things will not turn out as expected (things will go wrong, what will you do if one partner wants to leave and selling will incur a loss or the other partner can’t afford to buy them out?). However, a JV can be one of the best ways to get experience and get started when you want to get going and have limited funds.

Strategy Two – Bird-dogging

Of the true “no money down strategies” this is the best and easiest strategy to make quick cash, and there are property deals everywhere to which this strategy can apply. Here’s how it works.

1. Find an investor who has limited available time, and is in the market for more deals.
2. Ask the investor for a detailed description of the properties they are after.
3. Find a property deal the investor wants, and negotiate for them to pay you a “finders fee” for sourcing the deal.

Now, you won’t become incredibly rich using this strategy alone, the amount an investor will pay will be relative to the size of the deal and the profit in it for them. Most investors could afford $500 – $1K+ for deals that have been sourced for them. Not bad for what may be a few hours work (depending how good you are at finding deals).

A variation to this strategy is to find finance or joint venture partners for investors or developers looking to buy or sell deals. (Eg find an developer selling a block of units, or looking for a partner to take on a share in a development, introduce someone who fits the bill, and take a small share of the deal. For a bigger deal, the share you can ask is obviously bigger too – maybe 1%-2%). The sky is the limit when you start to look at creative ways to make money with no money down.

So where do you find investors for these deals? Anywhere – network with everyone you meet, attend investing events/seminars and you never know where it might lead. (You can also send us an email – we might know someone who is looking for deals)

Strategy Three – take your money out ASAP for infinite returns

One of my favourite ways to do No Money Down deals is to use a bit of cash initially, add value, then re-finance ASAP so you effectively can purchase the property with no money down. Believe me it’s much easier to find deals with value-adding potential, than it is to find deals that you can buy with absolutely no cash (but the latter is possible too). Examples of relatively simple value-add deals might be renovations, strata-titling, subdivisions, the list goes on. So long as the yield (return) is high enough to support the refinance and maintain the cashflow of the property, you can remove your initial cash investment and do another deal.

I hope these strategies might help investors see some different ways of getting started in property, or expanding your portfolio.

Share your comments below or drop us an email.

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