Real Estate Tips |7 min read

How to Buy a Rental Property with No Money: Top 7 Methods

If you’re wondering how to buy a rental property with no money, this is a great place to start. There are a few common methods of financing that every real estate investor should know about before delving any deeper. So, without further ado, let’s get into it.

Main Takeaways:

  • Hard money loans, HELOCs, FHA loans, partnerships residential-to-rental conversions, and other popular methods can enable you to buy a property with little money.

Table of Contents

  1. HELOCs
  2. FHA Loans
  3. Residential-to-Rental Property Conversion
  4. Seller Financing or Rent-to-Buy
  5. Partnering with Other Investors
  6. Credit Cards
  7. Hard Money Loans
  8. Pros of Buying Rental Property with No Money
  9. Cons of Down Payment-Free Rental Property Purchases


If you’re a property owner, you can use a home equity line of credit (HELOC). In other words, you can borrow your current asset equity as financial capital.

However, as Baltimore hard money loan providers, we feel people should stay informed about the downsides of a HELOC rental property loan.

HELOC loans are secured by your residential property. So, if you cannot repay the loans, your home will be foreclosed. This way, not only do you lose out on your investment aspirations, but also the assets you already have. Furthermore, you must possess a certain level of equity to qualify for HELOC.

FHA Loans

Federal Housing Administration (FHA) loans are just that: rental property loans backed by the FHA. One popular plus is that you may be eligible for a low deposit rate if your credit score is high enough. Also, you can buy rental multifamily properties with these loans.

On the other hand, there’s a catch: these loans are only available to people committed to moving into those properties within 2 months of purchase.

Residence-to-Rental Property Conversion

If you choose to rent out your current residence, you can benefit from a slashed-down down payment.

This will require that you convert your home into a rental. Also, because other people will be taking up your space, you will need to buy a new home to live in.

Seller Financing or Rent to Buy

When buying rental property from private sellers, you may have an easier time with the initial financing. After all, many are selling hundreds of units at once. So, they could have non-deposit-based systems prepared for financing. Rent-to-buy schemes work similarly.

The negatives are that buying rental property these ways requires you to gather property equity to a high baseline quickly. In turn, this requires you to demand higher rental payments from your tenants. Because of this, you may struggle to secure tenants willing to pay the rental income for your mortgage payments.

Partnering with Other Investors

If you have the time to invest in a property, but not the money, you could partner with investors. These people have the opposite problem, and you can compensate for each other’s weak points. In other words, they will handle buying the rental property and you will manage it.

Needless to say, you will want to spend lots of time, effort, and vetting before taking the plunge. First off, you will want to network all over the real estate industry, within different circles. In addition, you will need to do due diligence to ensure your partner is trustworthy. After all, they will be financially tied to you for years.

Credit Cards

Yes, you heard that right. Some people use credit cards as a way of buying rental property.

They may choose this method because of the faster buying process. With this method, you directly buy the property. This means you’ll pay fewer upfront closing costs than you’d experience with a middleman, like application fees. Furthermore, you won’t need to use any home equity.

On the other hand, this method’s risk can be very high. Doing this can lower your credit score. Also, if life happens and you can’t pay your credit card bills, you will pay the consequences. After all, credit cards have fewer protections and options in place than mortgages do.

In addition, you could be in trouble if your credit card is suddenly canceled. Were this to happen, you would be required to make your entire payment immediately. Also, you need a high credit limit when buying rental property with a credit card.

Hard Money Loans

Hard money loans are short-term, private, asset-based rental property loans. Maryland fix and flip loans are known among house flippers to be one of the best options available.

To start with, hard money rental property loans have more flexible qualifications than traditional loans. Traditional lenders often enforce strict, standardized qualifications of their borrowers. Meanwhile, hard money lenders are smaller businesses. Due to that, they can judge their candidates individually, taking in each person’s unique circumstances and needs.

To boot, the terms of these rental property loans are briefer. They are designed so that borrowers can get through the borrowing process as quickly as they can.

It’s important to note that these rental property loans’ strengths can also be weaknesses if in the hands of the wrong user. If you don’t get your ducks in a row in time for the accelerated payoff period, you will be in debt.

Furthermore, such loans can have higher interest fees because we expedite their delivery. However, if you are ready for these requirements, using these loans can increase your efficiency.

Pros of Buying Rental Property with No Money

Buying rental property with little to no money can come with many benefits. Here are some of them:

  • Less Saving: You can enter the rental property market while avoiding the need for significant advance savings.
  • Diversification: By investing in multiple properties, like apartment buildings, you can spread your investments wider. Then, you don’t put all your eggs in one basket, so when the market fluctuates, you will be protected.
  • Property Improvements: If you continually renovate your property, you can boost its value more and more.
  • Consistent Cash Flow: You can create a consistent cash flow to fund other investments.
  • Increased ROI: You could experience a gradual increased return on investment. This is because rent tends to increase while loan repayments can decrease.

Cons of Down Payment-Free Rental Property Purchases

As with any investment, there are risks to weigh before you find yourself buying rental property with no money. Consider the following factors.

Negative Equity

Housing markets are tenuous and volatile. As such, you never know what will happen to your property’s value. Should your property’s value decrease, you may receive negative equity.

Prolonged Repayment Period

While you may avoid putting down money upfront with the above methods, you will need to pay more later. As they say, there’s no such thing as a free lunch.

If you don’t adequately plan your payoff, you will have leftover debt. For example, if you don’t attract enough tenants, you won’t get the rent needed to pay your expenses. However, with some methods, like hard money loans, the repayment period isn’t too prolonged.

Gradual Equity Growth

By foregoing your deposit, you will have close to no equity starting off. It will grow in the long term. As a result, at least for now, you will have much less of an ability to sell, refinance, or use the property for other investments. So, be sure that you want to spend your time and resources on this specific property.

Legal And Tax Implications

Deals that require little upfront money have more multi-layered terms and conditions. As such, that could impact your legal status in various agreements, as well as your liability for taxes. In essence, you need to analyze all relevant papers before signing anything.

Buy a Rental Property with with MHML

If you’re looking into how to buy a property with no money, you’ll be pleased to know you have multiple options at your disposal. Credit cards, residence-to-rental conversion, and other methods can help you start investing.

We may be a tad biased, but a hard money loan can be one of the best options for real estate investors on any budget. These loans are sought after because they offer customization and expedited delivery that many other loan types cannot replicate.

By choosing a locally owned and operated business like Maryland Hard Money Lenders, you get the benefit of both our expertise and an unparalleled level of attention to detail necessary for buying rental property. We evaluate deals from a common sense approach and unlike banks, funding can be available in mere days – not months.  Contact us today to get started in your investment journey.

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