How to Buy a Home and Rental with No Money

Buying a home and rental property without having to put any money down may sound like a far-fetched idea, but it is indeed possible with the right approach. In this blog, we will explore some strategies to achieve this goal, including living in one side and renting out the other, qualifying for rental income, and taking advantage of low down payment options such as putting only 3% down or utilizing VA loans with 0% down payment.

One of the most popular strategies for buying a home and rental property with no money down is to live in one side and rent out the other. This approach is commonly referred to as house hacking and can be highly advantageous for aspiring real estate investors. By purchasing a multi-unit property, such as a duplex or a triplex, you can live in one unit while renting out the others. This rental income can then be used to cover a portion, if not all, of your mortgage payments, allowing you to essentially live for free while building equity and creating passive income.

To successfully qualify for a mortgage based on rental income, it is crucial to demonstrate the property's potential to generate sufficient cash flow. Lenders typically require a certain percentage of the rental income to cover the mortgage payment, known as a debt service coverage ratio (DSCR). This ratio ensures that you have enough income to cover your expenses and also accounts for vacancies and other unforeseen costs. By obtaining a rental appraisal and providing evidence of rental income from similar properties in the area, you can increase your chances of qualifying for a loan based on rental income.

Another option for buying a home and rental property with no money down is to take advantage of low down payment options. Traditionally, a significant down payment was required to secure a mortgage. However, today, many lenders offer programs that allow borrowers to put as little as 3% down on their primary residence. This means that if you are buying a property with a purchase price of $200,000, you would only need to come up with $6,000 as a down payment. This reduced down payment requirement can free up your savings for other investments or property improvements.

Additionally, if you are a veteran or an active-duty military member, you may qualify for a VA loan, which offers the remarkable benefit of a 0% down payment. VA loans are backed by the Department of Veterans Affairs and provide eligible individuals with the opportunity to purchase a home without any initial out-of-pocket expense. This benefit can be particularly advantageous for real estate investors looking to buy a home and rental property simultaneously, as it allows them to conserve their funds for other investment opportunities.

In conclusion, buying a home and rental property with no money down is not an unattainable dream. By embracing strategies such as living in one side and renting out the other, qualifying for rental income, and taking advantage of low down payment options like putting only 3% down or utilizing VA loans with 0% down payment, you can make this dream a reality. It is essential to do thorough research, consult with a real estate professional, and carefully evaluate your financial situation before embarking on this journey. With the right approach and determination, you can become a successful real estate investor without having to invest any of your own money upfront.