The first thing you learn in any formal cooking school is knife skills. You learn not only how to cut, dice, mince, and julienne but also which knife is needed for each job. 

For example, you would not use a large chef’s knife to cut bread or to peel fruit. 

The same applies to all No Money Down Strategies I list below.

They are just tools you need to apply at the right time and in the right circumstances.

Be like a master chef, know all the tools and techniques available but use them appropriately for best results.

Here are the ten no money down strategies:

  1. Installment Sale
  2. Lease Option
  3. Lease-Purchase
  4. Option
  5. Subject to
  6. Master Lease
  7. Rent-to-Rent
  8. Joint Ventures
  9. Assisted Sale
  10. Wholesale

Installment Sale

Installment sale or seller financing works exactly like any other sale but instead of bank financing, the seller is holding the note.

Why would the seller agree to seller financing?

Recently I had a conversation with the landlord who owns a couple of multifamily properties. He was considering selling his properties in order to retire so he didn’t want to do any exchanges. 

He consulted his accountant about the sale and was shocked to find out how much taxes he had to pay if he sold outright.

The solution was an installment sale or ” mailbox money” as I call it.

Here is a link to the IRS website to learn more about how installment sales are taxed.

An additional benefit for the seller is the higher return on investment, a 6 to 8 percent return from the installment sale beats 1 percent return from a CD.

Often by offering an installment sale the seller can receive a higher price and they save on closing costs. 

What are your benefits as a buyer?

  1. Little to no money down – 10 percent is acceptable to many sellers. You can obtain this 10 percent by having a JV partner, getting a personal loan, from your current home’s equity, or sell assets. One investor we know sold her car to get the deal she wanted. 
  2. Lower credit standard and qualifying income- Although a seller will want to check your credit and sources of income, the qualifying will not be as strict as qualifying for a bank loan.
  3. Lower closing costs – No origination fees, loan application fees, appraisals, and other junk fees.

How to Approach a Seller for an Installment Sale?

Start with a conversation, find out what their needs are. 

  1. How fast do they need to close?
  2. Why are they selling?
  3. Are they buying another rental property?
  4. Have they considered an installment sale to avoid a large tax bill?
  5. If they don’t need the money, would a 6 to 8 percent return sound attractive to them?

Based on their answers, create a written offer, include in it anything else that can show them that you are a credible buyer.

Lease Option 

Lease Option is a lease with an option but not an obligation to buy the property by a certain date. The buyer generally gives the seller option money (1-3% usually) in order to have the right to purchase the property in the future at a certain price. If the option is not exercised within the time frame specified in the contract, the buyer loses the option money.

For example, Sally likes a property, the landlord has it for rent and for sale but because of the condition, there are not many takers.

Sally thinks that she can add value to the property while living in it and because the home prices are expected to go up for at least one more year, she thinks she can profit handsomely from this arrangement.

The property is listed at $200,000, which is $20,000 under market price. Sally offers the owner to rent the property for one year, and buy it at the end of the year, she offers full-price and an option of $2,000. 

If the market conditions change and Sally doesn’t exercise her option, she can lose her option money, the labor, and money that went into fixing the property.

But if she is right and the market continues to go up, she can sell the property at 234,000 to $240,000.

When you do lease option use two separate documents, a lease and an option. 

How to avoid pitfalls when doing lease options. 

  1. Use a licensed loan servicing company to receive your loan payments and pay the seller’s loan. 
  2. Get the seller to sign the property transfer documents and keep them and the option money with a licensed title company. You can find investor-friendly title companies in our Directory.
  3. Record a memorandum of option.

Lease Purchase

Lease Purchase is similar to Lease with Option to Buy, the main difference is the Option part.

While a lease with an option gives the buyer an option to purchase the property within a certain time frame, the lease-purchase obligates the buyer to purchase. With both contracts, if the buyers walk away, they lose their deposit or option money.


An Option is exactly the same as the Lease Option without the Lease part.

An option gives you the right to purchase a property during a certain period at a predetermined price. 

This can be used for properties that can be rezoned to more profitable use, mismanaged small rental properties that can be turned around quickly, condemned properties, obsolescent properties that can be put to better use.

You really need to know your area and to a certain degree have a good imagination. 

Learn how to solve people and property problems and you can be very successful with options.

“Subject to” Purchase

The “Subject to” Purchase is a form of seller financing. You just take over the seller’s mortgage without explicit consent from the lender.

Most mortgages have a “due on sale” clause that makes the loan immediately due if the lender decides to enforce the contract. Most of the time they choose not to.

When should you use “subject to”?

The best use is for short term financing. Otherwise, this strategy carries too much risk for my taste.

Master Lease

Master leases allow investors to control properties without owning them. It can be used to take over mismanaged apartment buildings and turn them around.

The properties that are good candidates are barely making enough cash to pay all expenses. They may need upgrades, better management, and maintenance.

An investor can sign a master lease for 3 or more years, with a predetermined purchase price.

The landlord gets a guaranteed rent and no-hassle monthly income and the investor can pocket the difference between the rent he collects from tenants and the money paid to the landlord.


This strategy can work in certain situations, for example leasing a property from a landlord, furnishing it, and renting it short-term or renting it by the room. Rent-to-rent is very appealing to many people because it seems easy, however, to do it successfully, you have to know your numbers.

Joint Ventures

That’s how I started my investment career. I got some clients and friends for breakfast one day and showed them my plan. We created an LLC and began buying properties at the auction, this was 2008. I was the managing partner and I oversaw the buying, rehab, and selling of the properties. We all had 25% ROI during this time. 

Your joint venture partners can be your relatives, clients, friends, anyone who knows you and likes you. They don’t have to be rich people, we all started by investing $25,000 each.

Assisted Sale

Have you seen ads for OfferPad, Open Door, and Cash Buyers? Did you know that they exist because 30% of home sellers are willing to sell below market price because they don’t want to bother with repairs and showing the property?

If you are an investor with skills, how can you help these sellers and earn a profit?

Offer them an assisted sale, a guaranteed price if they give you a couple of months to fix the property. You can do this by offering a naked option without the lease. The seller can get a better price than if they sold the property as-is and you get your profit.


Finally, you can use wholesaling to buy and resell the property. This strategy sounds easy when you listen to the gurus but the reality is that it requires knowledge of property values, rehab, and negotiations. 

Wholesalers find properties under market value 45%-50% and resell them usually to another investor also at a discount price. 

I don’t have to tell you that finding properties at this discount is very difficult when most properties in the MLS sell at 98% of the asking price within days. You need to be a really good negotiator and have plenty of money for marketing to get those deep discounts. You will be competing with all the IBuyers, financed by Wall Street. 

Is this possible to do, yes, is it possible for 99% of the investors – the answer is no?

Watch our Q&A video on this topic or read the transcript below.

Q&A Seller Financing

1. Many of your recommendations like “ask the seller what they want to do after they sell the property” seem very difficult if I am working with a real estate agent who is communicating with another real estate agent. What are your thoughts regarding working with an agent?

My first thought is to train your agent to ask these questions. They will not always get an answer because the seller’s agent is not supposed to reveal the motivation for a sale but many agents do. Also make sure you tell the agent that they will get their commission.

If you are looking for a seller financing opportunity, look at the properties that are for rent already and talk to the landlords directly.

2.  Once a seller agrees to seller financing, how is it implemented? For example: does a title company take care of the details? When does title transfer? What things should we pay attention to (for example, that taxes and HOAs are getting paid, etc)?

Seller financing sales are done exactly the same way as any other sales. The only difference is that the seller is financing the property for you instead of the bank. Usually this is a short term balloon mortgage due in 5 to 10 years.

The title transfers when you buy the property. Yes, the title company takes care of everything except the note, you need a lawyer for that.

There is a different way to do this, using a “land contract” With a land contract the title doesn’t pass to the buyer. The buyer makes payment to the seller and after the last payment is made, he or she gets the deed. I have used this for a piece of land. 

In both cases you own the property and pay taxes and HOA fees.

3.  I’m interested in the difference between a verbal offer and a written one. Recently I made an offer in a condo and my realtor insisted on making a verbal offer first. My thought was to present a written offer regardless. What are your thoughts on this?

Verbal offers are easier on the agents but no seller will consider it seriously. My guess is because you made a low offer the agent didn’t think the seller would accept it so why waste time.

Most of the time, the agents are right but sometimes they are wrong because you don’t know what the motivation of the seller is. Not to mention this may change.

You can insist on a written offer and the seller’s agent has an obligation to present it.

Think about what a verbal offer says. It says that you are not a serious buyer. You need to submit even low offers with a prequalification from a lender or proof of funds.

4. You didn’t mention the sandwich lease option in yesterday’s video. Does it work?

Sandwich lease option. This is exactly what it says, you lease option a property from the seller and then find a tenant buyer to lease option it to.

The potential of many things going wrong is great because you have two leases and two options. This is a very difficult way to make money. 

5. I didn’t understand why we need a separate document for the option and the lease?

I think I mentioned this in the video but I will elaborate.

The lease option documents I have seen make the option contingent on the tenant not breaking the lease. For example if you stop paying the rent, you lose the option and the option money.

If you had two separate documents, you could have sold or assigned the option to someone else.

6. Are “subject to” deals legal?

Yes, they are legal however most lenders have a “due on sale” clause in their lease which gives them the right to request the loan to be paid in full. 

7. Why not try wholesaling? There is nothing to lose.

I have to be clear, i am not against wholesaling however many advertise this as a good way to start in real estate investing. While some will succeed, wholesaling requires skills like negotiating that beginners usually lack. It also requires money for marketing.

8. I am interested in assisted sale. Can you give an example

Here is an example; You find a property that has been sitting on the market for a while because it requires a lot of work.

The seller is asking $200,000, after the property is fixed, it can sell for $300,000

The repairs would cost $25,000.

The seller doesn’t have the money for the repairs so she has to sell the property As-Is.

You can approach the seller and offer a guarantee price of $220,000. You can do the work and sell the property at $300,000, after you pay the seller $220,000, your profit is $55,000.

9. Also what kind of contract can you use with assisted sale?

You can use a straight option. Offer the seller a guaranteed price. The seller will be getting more than they would otherwise. Talk to an attorney before you use any of these strategies.

About the author

Jana Christo is a business owner, real estate investor, and property manager. She has 16 years of experience in most areas of real estate.
During the last recession, she was also the managing partner for a company that bought and rehabbed properties from the court foreclosure auctions. Today, she manages her own portfolio of rental properties and shares her experience on