People are always asking “How can I invest in Real Estate with no money down”

You see it on late night TV, on the infomercials “invest in real estate no money down”

No money down is cry of the poor: “No money down cars, no money down houses, no money down furniture etc.”

If you are broke and have no savings you need no money down for everything. However, real estate is historically a rich man’s game and there is no such thing as real “no money down real estate”. In truth, there is ALWAYS money going down, but it may not be your money.

Instead of “no money down” I want to talk about OPM: Other people’s money.

Regardless, let me share with you the different ways that I have purchased, controlled and owned real estate with “no money down” over the past few years:

Vendor financing – If you have a seller who has a property owned free and clear, rather than going to the bank for a mortgage, you can ask the seller to take back a mortgage on the property. One of the earliest deals I did was on a property worth $420,000 and the vendor took back a mortgage of $225,000 at 5.75% which was a high rate back then. There was no bank involved, no credit application, and the mortgage was one page typed up in Microsoft word. I have done a few deals like this over the years, they are rare, but when they happen, they are gold.

Promissory note – A promissory note is a promise to pay, and can be similar to a mortgage. I bought my own home with a promissory note and typically they can be used for 2nd mortgages or 3rd mortgages depending on how you structure the deal. Why would you want a promissory note? If you are buying with little or no money down and want to avoid CMHC fees in Canada, CMHC currently will charge you 4% on a 5% down payment, essentially taking all of your money. Instead of losing all of your down payment, take 80% debt with the bank, 15% promissory note to the vendor and 5% down, in that way you get to keep your equity.

Forgivable Note – A forgivable note is like a promissory note, or a debt that you can buy back for $1. You can get a vendor to issue you a promissory note, or a debt and then buy it back for $1 later creating equity in an instant.

Lease Option – A lease with option to buy is one of the best ways to buy real estate. This technique is common in commercial real estate and in residential rent to own. This is great structure for both the vendor and the buyer because the seller gets the security of owning the title and the buyer gets the power of an option. Lease options can be true no money down deals if done right.

Hold until sold – If you are negotiating with a vendor to flip is property and he wants a higher price, you can roll your debt costs or investor costs into his purchase price and work out a “hold until sold” arrangement which is like a Joint Venture. He holds the property until it’s sold and you fix the property and sell it. This arrangement is a little bit risky for both parties, but can work well if both sides hold up to the agreement.

Wholesale / Assignment – One of the fastest ways to make money in real estate is a wholesale/assignment of contract. I buy and sell property every week with assignment of contract and it is truly one of the best ways to make money in no money down real estate. Typically you are risking $1000 or $2000 to tie up the contract and can sell the contract for $5,000, $10,000, $20,000 or even $50,000 if you negotiate low enough. Another great thing about assignment of contract is you usually get paid out in 30 days so it’s also one of the fastest ways to make money in real estate.

Joint ventures – A joint venture is one of the most duplicable ways to make money in real estate. As explained in my book Money People Deal ( there are three parts to putting together a deal: The money, the people and the deal. If you have the deal tied up and the team ready to go, there are countless investors out there looking for deals to give them a return. Joint ventures typically have a 50/50 , 60/40 or 70/30 split, but this is where I started in my career and a great way for you to get going in real estate.

Private Lenders – A private lender is someone you have a relationship with that wants to lend you money to purchase real estate, this is a little bit different than a JV because they are getting paid a flat rate, typically a higher rate than a bank to bear the risk, usually 8-12%. Because you have a direct relationship, there are no broker fees and you know each other 1 on 1.

Hard money lenders – Hard money lenders are typically businesses or MIC’s (mortgage investment companies) That lend money for fees and interest, starting usually at 2%-6% in fees and 8%-18% in interest. Hard money lenders are a great place to start because they are private companies and you can negotiate different terms and rates with them. A solid mortgage broker will have access to many hard money lenders.

Credited taxes, utilities, etc. – this last technique is a little bit more ninja than the ones above, but when purchasing property, you can create equity at closing by getting the vendor to credit you “one year’s utilities and one year of taxes” this is one way to squeeze extra money onto the table and get into property with little or no money.

Real estate is a rich man’s game, but you can get started with little or no money if you have the INTELLECTUAL capital to put a deal together.

Check out my book for more info on Joint Ventures and how to put deals together with little to money or go to to check out a free video series on how to put deals together with Other People’s Money.

Respect The Grind,
Stefan Aarnio