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Can we still buy rental properties zero down and make money?

By
Mortgage and Lending with NeTraffic Management

It's the question I get asked most often.  Can we still buy rentals zero down and make money.  The answer is simple, Yes AND Maybe!

 

While it is definitely more difficult to find properties that fit the good ole' 1% rule these days, it is not impossible. 

 

Every week I see 1% rule properties funded with 100% financing here at USFG.  Where are they finding them?  Well, that's the thing!  The metro areas are not necessarily ripe with them, but they do surface as fixers here and there.

 

The smaller outlying areas seem to produce them on a regular basis.  These properties are great to purchase with zero down financing, as they often break even or even cash flow from day 1.  Another popular way to obtain 1% rule properties these days is to build them. 

 

With Zero Down Construction loans available from a certain lender (that would be me!), we can build 1-4 unit properties that tend to have upwards of 20% equity in them.  Depending on the rental income in the area, these properties may produce nice cash flow by simply utilizing an interest only loan as the takeout loan (the loan you get to PERMANENTLY finance the property once you have completed construction).  The other nice thing about building the rental is of course, you have a brand new units to rent. 

 

If the properties cash flow is a little too close for comfort, the use of a cash flow loan can produce big cash flow for today's savvy investor.

 

The bottom line is this.  Properties that will cash flow are great, but a property that simply pays for itself on a monthly basis is still a moneymaker!  Appreciation, tax benefits and the ability to raise rents in the very near future will make the investment well worth the money... or the paperwork in this case!

 

Feel free to call if you have questions, or simply would like to comment.

 

Here's to an exciting and profitable 2007!

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