Financial Channel

Sparked by another thread here discussing investment properties. Has anyone here had any experience buying rental properties with no money down? Doable or a dream?

I've been holding off for the last year because I don't have any free capital to throw at a rental property - but if I could swing it without any capital I'd do it.

Second part of the question - prices are high right now but interest rates are low. Better to wait until rates are high and prices are low? Or don't bother with worrying about this?

Don't bother. I do not want to get into specifics but, just take my advice.

Out of Experience, and this was with RBC & National Bank in Montreal,


If its anything more then 4 units, its considered commercial and you do need not only 25% but sometimes 30-35% cash down.

Anything under 4 units is still considered a residential dwelling and therefore is doable with no cash down.

However, no cash down means you need to buy Mortgage Insurance which will raise your rate by 1% or more...which requries high"er" monthly payments..which 99% of the time will render the investment not profitable anymore and even give you negative cash flow on a monthly basis

The only time it is worth is it when you don't have any cash at that moment and ca afford t go into the negative. But this has to be very well planned.

It is hard enough to get positive cashflow with 25% down, let alone no money down.

It's very rare to buy real estate with no money down. In an investment situation, your best shot might be to take over the seller's mortgage. If they had a 5% down payment, you can take over their mortgage with just the 5% down. If their property went down 5% since they took out the mortgage (i.e. they bought for $200k with $190k mortgage and is now selling for $190k), your down payment should be $0. Properties in strong markets with small down payments are extremely hot and in demand.

If there's a better way, I'd like to know about it.

Conversely, if you're a seller then you should offer the option of assuming your mortgage if the down payment is small. That maximizes the number of potential buyers who can afford your property.

Possible? yes. However, money gets more expensive the closer to 0% down you get. There should be a very compelling reason for you to get that last 5% by taking a $10,000 cash advance on your credit card.