How to Buy a Rental Property With No Money Down in 2024

By: Craig Berry Updated By: Ryan Tronier Reviewed By: Paul Centopani
March 20, 2024 - 12 min read

Learn how to buy investment property with no money down

If you’re wondering how to buy a rental property with no money down, you’re not alone. Many aspiring real estate investors start with little cash flow.

Believe it or not, your current financial situation might not be a barrier.

Both renters and homeowners have the opportunity to become real estate investors, building wealth through home equity, even when they have little or no money for a down payment.

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Can you buy a rental property with no money down?

Yes, you can buy a rental property with no money down.

When house flippers, home buyers, and investors employ the “no money down” strategy, they’re essentially acquiring real estate without committing a significant portion of their own money into the initial costs of a rental property.

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While buying a property the traditional way usually requires a sizable upfront investment, knowing how to buy a rental property without any money down can streamline your investment strategy. Moreover, real estate investors might find that using minimal personal funds to purchase rental properties can lead to a more favorable return on investment (ROI).

Exploring alternative financing options, such as leveraging home equity, securing investment property loans with no down payment, or partnering with co-borrowers, provides a potential path into the real estate market, especially when personal savings are limited.

11 ways to buy a rental property with no money down

1. Rent out your primary residence

If you already own a home, you’re ahead of the game. One of the more common ways to become a real estate investor is by turning your current primary residence into a rental property. There are significant advantages to “backing into your first rental property” this way.

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  • Traditional investment property loans require a larger down payment and come with higher interest rates. You can typically expect a 20% down payment requirement.
  • The interest rate on an investment property is generally higher than the rate on your primary residence by a half percent or more.

The investment strategy is to rent out your current home and finance the next home you buy as a primary residence (meaning you’ll be living there full time). That way, you pay a lower interest rate on both properties. And if you’re still making mortgage payments on that first home, you can use the income you make from rent to cover part or all of the mortgage.

“Be prepared to provide a letter of explanation,” notes Jon Meyer, loan expert and licensed MLO. “It may be requested depending on how long you have been in the original home.”

2. Leverage your home equity

If you own a home but prefer not to rent it out, using your home’s equity to buy property with no money down could be a viable option.

Home equity refers to the difference between your home’s current market value and the amount you owe on it. By tapping your home equity, you may find that you have enough money to not only cover a significant down payment but possibly to buy an investment property outright, depending on the amount of equity available.

To tap your home equity to buy an investment property, you have several options.

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Home equity loan

A home equity loan provides you with a lump sum of money upfront, which you then pay back over time with fixed monthly payments, much like your original mortgage loan. This can be especially helpful as it gives you a defined, budgetable amount to use for the down payment on an investment property.

Verify your eligibility for a home equity loan. Start here

Home equity line of credit (HELOC)

A HELOC offers flexible access to funds by turning your home’s equity into a credit line. It’s akin to having a credit card with a limit based on your property’s equity, allowing for withdrawals as needed within the draw period. This makes HELOCs ideal for managing the varying costs associated with purchasing an investment property, offering a convenient way to access funds.

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Cash-out refinance

A cash-out refinance replaces your existing mortgage with a new loan for more than you owe on your home, allowing you to take the difference in cash. It’s an effective way to access a large amount of money from your home equity to put towards buying an investment property.

Cash-out refinancing is available for both conventional loans and government-backed loans, providing homeowners with various options to access their equity for investment opportunities, regardless of their loan type.

Compare cash-out refinance quotes from multiple lenders. Start here

3. Consider house hacking

Your primary residence doesn’t have to be a single-family home. Multifamily homes can be a great way for novice real estate investors and aspiring property managers to get started buying properties that generate income.

Check your eligibility for a multi-unit FHA loan. Start here

House hacking involves purchasing a multifamily home, residing in one unit, and renting out the others. For instance, if you buy a duplex, triplex, or quadplex, you would live in one unit, while tenants would rent the remaining one, two, or three units.

Most house hackers look for a good real estate deal on a 2-4 unit property and live in one unit while renting out the others. They then use the rent payments to help offset mortgage payments.

An FHA or VA loan can make the purchase of such multi-unit properties more accessible and favorable. In fact, VA loans have no minimum down payment requirement, and FHA loans only require 3.5% of the purchase price as a down payment for borrowers with good credit. House hacking is particularly accessible with an FHA 203k loan, which is designed for fixer-uppers.

These options, along with potential gift funds or down payment assistance, minimize upfront costs significantly compared to the traditional 20% down payment, aiding those exploring how to buy a rental property with minimal financial start-up funds.

If you’re investigating how to buy a rental property with no money, consider house hacking with

4. Try the BRRRR Method

The BRRRR strategy refers to a traditional real estate investment strategy that requires initial cash but provides returns later. The acronym BRRRR stands for “buy, renovate, rent, refinance, and repeat.”

Here is how the method works:

  1. Buy: You acquire a distressed property that needs remodeling with a renovation loan. The goal here is to find a property that, after some improvements, can generate a higher rent than its current condition.
  2. Rehab: The second step is rehabbing, or renovating, the property. This could involve minor cosmetic updates or major structural fixes. The aim is to improve the property’s condition and thus increase its value.
  3. Rent: Once the property has been improved, it is rented out to tenants. The rent collected should ideally cover all expenses, such as mortgage payments, insurance, property taxes, and any maintenance costs.
  4. Refinance: After the property has been rented, you then refinance the property with a new mortgage. The new loan is ideally based on the property’s increased value post-rehab. In many cases, the new loan will be large enough to pay off the original mortgage used to purchase the property and cover the renovation costs.
  5. Repeat: The final step is simply to repeat the process with a new property. The cash-out funds from the refinance step are used to purchase another distressed property, and the cycle begins again.

The BRRRR method can be a powerful strategy for those who are exploring how to buy a rental property with no money down, but it does require significant real estate and financial knowledge to execute effectively. It also comes with risks, such as unexpected renovation costs, difficulty refinancing, or problems finding tenants. It’s important to do thorough research and possibly seek professional advice before embarking on this strategy.

Review your renovation loan options. Start here

5. Purchase with a co-borrower

If you’re keen on investing in rental properties but lack the funds for a down payment or closing costs, consider partnering with a friend who has the capital but not the time to learn about property investment.

By becoming co-borrowers, this arrangement allows both of you to pool resources and share the responsibilities and benefits of ownership, including monthly payments, rental income, and equity growth. This collaboration could serve as a practical solution, enabling you to embark on your investment journey together.

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When considering how to buy a rental property with no money, remember that a co-borrower can be more than just a friend. They can also be a family member or even a stranger willing to act solely as a business partner in your real estate venture.

6. Look into a rent-to-own home

If a traditional mortgage is not suited to your financial situation, another proven way to invest in real estate with no money is through what’s known as a lease option, commonly referred to as a rent-to-own home.

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With lease option agreements, the property owner charges the buyer a monthly or yearly premium in the form of higher rental payments. The excess rental fee will then be channeled towards the purchase price of the home.

This setup may require paying a slightly higher rental fee, but it enables an investment path in real estate under less conventional financial circumstances.

7. Assume an existing mortgage

An assumable mortgage is one where the buyer can take over the seller’s mortgage, typically with little to no change in terms or interest rate. Basically, the buyer receives the title to a property in return for making monthly payments on the seller’s mortgage.

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Using the seller’s existing financing can be especially effective if the current loan has a low interest rate. But keep in mind that this scenario requires a bit more research.

In particular, you will want to make sure there is no due-on-sale clause. This type of clause prohibits the new buyer from assuming the mortgage. And more often than not, assuming a mortgage will require lender approval. So you’ll still have to prove your creditworthiness and fill out some paperwork.

8. Watch for seller financing

Another way to acquire property with no money down is with help from the seller. Known as “owner financing" or “seller financing,” this type of loan is an agreement where the seller handles the mortgage process instead of a financial institution. The borrower repays the loan as specified in its repayment terms, which are detailed in the formal agreement.

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This works especially well with sellers who have no mortgage. For example, this can happen when someone inherits a property and does not want to keep it.

For sellers who are willing to take on the role of financier, owner financing can help sellers move a home faster with sizable returns on their investment.

9. Try a hard-money loan

House flippers often turn to hard money lenders—private individuals, investors, or organizations—for financing fixer-uppers. That’s because hard money loans and private money are often lent with less stringent underwriting compared to traditional mortgages.

Hard-money loans prioritize the value of the property over the credit score of the borrower and have high interest rates and short terms. If a fixer-upper meets a lender’s loan-to-value criteria, you might secure it with minimal or no down payment.

Check your investment property loan options. Start here

Also, “if you are buying an investment property, you will need collateral, such as a separate property, to go this route,” says Meyer.

10. Consider a gap lender

Gap lenders step in to finance the down payment on your real estate investment in exchange for a partial ownership stake in the property. While this option offers an immediate solution to funding hurdles, it’s important to note the high interest rates and fees attached.

Considering gap funding? Be aware that it’s an expensive route. If leveraging your own funds isn’t feasible, a discussion with a gap lender is worth exploring. Yet, exercise caution, as the financial burden of these agreements can be substantial.

11. Use a credit card

Using a credit card to buy a rental property can be quite risky due to the high interest rates and potential for mounting debt. However, it may be a feasible short-term solution in some situations, especially for relatively small amounts needed to close a deal.

For house flippers looking to maximize their home buying budget, reallocating renovation funds towards the down payment and using a credit card for updates and repairs can be a strategic move. This approach allows for an immediate start on renovations, potentially increasing the property value quicker.

However, to circumvent the burden of high interest rates for renovation expenses, considering a HELOC could be a more cost-effective strategy. A HELOC typically offers lower interest rates and can provide a flexible funding source for repairs, reducing the overall financial risk and increasing the potential for profit.

Check your HELOC options. Start here

Pros and cons of buying rental property with no money down

When it comes to real estate investment, the idea of buying a rental property with no money down can be very appealing. However, like any investment strategy, it has its own set of advantages and challenges.


  • Minimal initial investment: One of the biggest advantages is the low barrier to entry. You can start investing in real estate without needing a significant loan amount upfront, making it accessible for many aspiring investors. This is particularly true for owner-occupied properties, where living in one unit while renting out others can significantly reduce costs.
  • Potential for higher returns: With little to no initial investment, the potential return on your investment can be significant. This leverage can amplify your profits as the value of the property appreciates over time, especially in multifamily properties that can generate considerable passive income.
  • Learning opportunities: Starting with a no-money-down approach can be a great learning experience. It forces you to be creative with financing, perhaps utilizing private lenders, and to deeply understand the market and property investment strategies.


  • Higher risk: Purchasing a property with no money down often means taking on more debt, which can increase financial risk. If the property value decreases or if you face difficulties with tenants in multifamily properties, you might end up owing more than the property is worth.
  • Dependence on financing: This approach heavily relies on finding lenders willing to finance the entire purchase price, which can be challenging. Loan terms from private lenders might also be less favorable compared to traditional lenders.
  • Potential for negative cash flow: If the rental income from your property investment does not cover your mortgage payments and other expenses, you might face negative cash flow. This can put financial strain on your investment and personal finances.

While exploring how to buy a rental property with no money down can be a gateway to real estate investing and generating passive income, it’s important to weigh the potential risks against the benefits. Proper research, understanding of the real estate market, and careful planning are essential to succeed in this investment approach.

FAQ: How to buy a rental property with no money down

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How can I buy a rental property with no money?

To buy a rental property with no money, you can explore various financing options like seller financing, lease options, or partnerships. Another strategy is to secure a mortgage that covers 100% of the property’s value. Exploring how to buy an investment property with no money down involves being resourceful and exploring creative financing methods.

How much profit should you make on a rental property?

The profit you should make on a rental property typically ranges from 6% to 8% annually, after accounting for expenses like maintenance, taxes, and insurance. However, the ideal profit margin can vary based on location, property condition, market conditions, and the initial loan amount.

Is it harder to get a loan for a rental property?

Yes, it is generally harder to get a loan for a rental property compared to a primary residence. Lenders often require a higher down payment, a better credit score, and may charge higher interest rates due to the increased risk associated with rental properties.

How can I invest in property with no money?

Investing in property with minimal funds is possible by using strategies like house hacking, where you live in part of the property and rent out the rest, or by partnering with other investors. Other options include seeking seller financing or using government-backed loan programs. Understanding how to buy an investment property with no money down makes real estate investment accessible to those with limited capital.

Discover how to buy a rental property with no money

Launching into real estate investment and wondering how to buy a rental property with no money? It’s simpler than you may think, even for beginners.

Don’t wait to become a seasoned real estate entrepreneur. Explore ways to buy property affordably and connect with a mortgage lender to learn more about your loan options.

Click the links below to begin your journey.

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Craig Berry
Authored By: Craig Berry
The Mortgage Reports contributor
With over 20 years in mortgage banking, Craig Berry has helped thousands achieve their homeownership goals.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.