What does investing with no money down mean? Is it really a thing? When we talk about investing in real estate with no money down, are we saying that houses are free?! 

Not at all!

Houses are far from free except, of course, in special situations like when you inherit one.

How then do we invest with "no money down"?

Investing with no money down simply means that you do NOT have to come up with any money from your own pocket.

When investing with no money out of pocket, you are paying ("money" of course) to buy a property by leveraging other available funds.

Here are five ways to do this:

Here's where you take over an existing mortgage payment from a seller! It means you are taking ownership of the house "subject-to" the existing mortgage. You are continuing to pay what the seller owes on their mortgage on a monthly basis while earning your cashflow on the property if you plan on renting out the house. Leveraging an existing mortgage in this scenario means you won't have to worry about down payments or qualifying for another mortgage. Your credit score or income wouldn't matter either.

Just like the name sounds, when you are using a seller financing strategy, you have the seller of the property as the bank. It's that simple. In this scenario, just like subject-to, you wouldn't need to deal with actual banks or worry about qualifying for a mortgage. You come to an agreement with the seller on financing terms that make sense for both of you.

In a partnership scenario, you partner with someone who is funding the real estate deal and split the profit. Pretty straight forward. Someone else has the money and you have the information. You both make the real estate deal happen. How you split the profit depends on your agreement with the other party. It is not uncommon to find a 50-50 split agreement in a partnership of this kind.

Hard Money Lenders are lenders who primarily work with investors. They usually have higher rates than typical banks. However, they can fund your deal very quickly and will not need to take a look at your income documents. Hard money lenders are more particular about the numbers on your deal. They would typically fund your deal if it looks profitable.  The asset becomes the collateral and that is why they are regarded as asset-based lenders.

Private money lenders are regular people like you and me, who are looking to invest their capital to get back good returns on investment. Once the individual indicates interest in lending on your project to get an agreed upon return on investment (common to find 8% to 15% returns), you'll have your real estate attorney draft a Mortgage Note and in many instances will include a Mortgage Deed as well. A private money lender's capital is protected by the asset itself, and a hazard insurance policy. Once paperwork is all processed, you are funded on your deal.

You have discovered a few ways to creatively fund your deals with no money out of pocket. You will find, in your real estate journey, that there are many more different ways to do this and money is hardly the issue. Having the right knowledge and being armed with the appropriate information, including network is key to your success. You can do as many real estate deals as you want if it's easy for you to find deals and finance them.