Nothing down? Exactly why would a seller want to walk away from closing with nothing? The truth is, they normally wouldn’t, and that brings up the most important point about real estate investing with no downpayment: A seller almost always needs cash at closing, but it doesn’t have to be YOUR cash.
Nothing Down – A Few Ways
Sometimes sellers are able to offer terms and a low or no downpayment, but often you have to find a way to get at least 70% of the price to them in cash. This is not only so they can get some of their equity out, but also because they will probably need to pay off the existing loan. So to get in with nothing down, you need to think in terms of how to get a primary loan, then how to raise the money for the remainder. A couple examples follow.
A few banks still do “no doc” loans, meaning they don’t require any verification of income, source of downpayment, etc. Since they generally loan only 70% to 80% of the property value, you need a seller who is willing to take a second mortgage from you for the other 20% to 30%, to make it a nothing down deal. They get 70% or 80% in cash, and payments for...
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