How Can You Buy a House With $0 Down, and Is It a Scam?

TL;DR

You can buy a house with zero dollars down through creative financing, including a subject-to deal that transfers the deed while leaving the seller’s mortgage in place. The buyer takes ownership, makes the existing payments, and can install a tenant, while a title company handles the transfer and issues insurance. Read on for the deal structure, inspection window, funding options, and risks.

Transcript

how much did you buy this house for wait what why so it turns out we found the secret to buying a home for zero dollars down is it a scam is it real it felt a little fake that's what we're gonna go find out like you're crazy you're crazy you're crazy you're crazy I was told I was crazy for four years and then last week one of my good friends that c... Read More

Key Insights

• Creative financing allows you to buy homes with zero down by taking over existing mortgage payments.
• 'Subject to' financing involves transferring the deed while keeping the mortgage in the seller's name.
• No credit checks or personal cash are required for 'subject to' deals, making it accessible to more people.
• Finding deals often involves contacting sellers with expired listings who failed to sell through agents.
• The process includes a 10-day inspection period to back out without losing earnest money if needed.
• Private money lenders can fund closing costs and refurbishments, using others' capital instead of your own.
• Exit strategies include midterm rentals for traveling professionals or regular rentals for stable income.
• Real estate agents can earn commissions without needing a real estate license in these transactions.

Questions & Answers

Q: How can you buy a house with zero dollars down?

Pace describes offering to take over a seller’s existing mortgage payments. The seller moves out, the deed transfers to the buyer through a title company, and the mortgage remains in the seller’s name.

Q: What is a subject-to real estate deal?

A subject-to deal separates the mortgage from the deed. The existing mortgage stays in the seller’s name, while the deed transfers to the buyer, who becomes the property owner and makes the payments.

Q: How do you find sellers for subject-to deals?

Pace says he calls sellers whose listings expired after real estate agents failed to sell their homes. He offers to take over their mortgage payments and says sellers accept that proposal 80% of the time.

Q: Who owns the house after a subject-to purchase?

The buyer becomes the owner after the deed is transferred through a title company. The seller is no longer the owner, although the mortgage remains in the seller’s name.

Q: What role does the title company play in a subject-to deal?

The title company transfers the deed from the seller to the buyer. It also issues insurance to confirm that the paperwork and transaction were completed legally.

Q: Does a subject-to buyer need a credit check or traditional mortgage documents?

Pace says his credit has never been checked for the houses and commercial buildings he bought with creative financing. He also says he has not provided documents such as a W-2 or tax returns for those purchases.

Q: Do all of Pace’s creative-financing deals require no cash?

No. Pace says 20% of his deals require no cash, while 80% require cash that he obtains from somebody else rather than using his own money.

Q: How does the 10-day inspection period reduce risk?

The contract gives the buyer a 10-day inspection period and an opportunity to exit during those 10 days. Pace also uses that period to find a buyer, while warning that exceeding it could cause the down payment to be lost.

Summary & Key Takeaways

• Definition: Creative financing includes subject-to deals that let a buyer take over an existing mortgage payment arrangement.

• Definition: A deed is described as a receipt of ownership and is separate from the mortgage document.

• Step 1: Contact sellers with expired listings after their homes failed to sell through real estate agents.

• Step 2: Offer to take over the seller’s existing mortgage payments.

• Step 3: Transfer the deed to the buyer through a title company while the mortgage remains in the seller’s name.

• Step 4: Find a tenant who can move into the house and make payments on the buyer’s behalf.

• Number: Pace says sellers accept his mortgage-payment offer 80% of the time.

• Number: Pace says 20% of his deals require no cash and 80% require cash supplied by somebody else.

• Number: The contract provides a 10-day inspection period, giving the buyer 10 days to exit or find another buyer.

• Compare: Subject-to keeps the existing mortgage, while seller financing is identified as a different creative-financing structure.

• Who: Pace is presented as a creative-financing investor associated with HGTV’s Triple Digit Flip.

• Tool: A title company transfers the deed and issues insurance covering the legality and completion of the paperwork.