Q&A: How do you get into rental properties with no money down?

Question by Pale Face: How do you get into rental properties with no money down?
I’m trying to get into real estate as a landlord in the Houston area. I have no down payment, but excellent credit. Thanks in advance for your help.

Best answer:

Answer by Real Estate Guy

First, with investment loans you need 20% or more down.

However, look long and hard at getting involved in this!!!

Even if you could find 100% financing, your rental income will NOT cover the loan. This mean that you would be covering the difference between your rent coming in and your mortgage payment.

For example. Lets say that your rental income is $ 1,000 a month. However, your mortgage payment is $ 1,500 a month. You would need to come with an additional $ 500 a month just to break even.

A rule of thumb is this: your total monthy expenses on a rental, including the mortgage, taxes, insurance shouldn’t be more the 50% of the total rent coming in. If you can get $ 1,200 a month rent, your total mortgage (PITI) shouldn’t be more then $ 600 a month.

You will look at this an assume that the other 50% ($ 600/mn) is profit. WRONG. This will cover upkeep, renting expenses and other costs.
You can’t; you have to have money to put down.

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