Tap to get financing
Multifamily Loans
Property Types
MultifamilyHealth Care & Senior LivingStudent HousingAffordable HousingMobile Home ParkOffice, Retail & More
Loan Options
Fannie MaeFreddie MacConstruction LoansLoans Under $1MFreddie Mac SBLFHA/HUD Multifamily LoansForeign National LoansCMBSBank LoansLife CompaniesBridge LoansHard MoneySoft MoneyMezzanine FinancingCrowdfundingSBA 504 LoansMezzanine Construction LoansUSDA 538 LoansFix and Flip LoansFractured Condo LoansDSCR Loans
Resources
BlogLoan DocsForms and TemplatesRatesLingoVideo LibraryMultifamily For SaleCommercial MortgagesFrequently Asked QuestionsBeginner's Guide
Calculators
Multifamily Mortgage CalculatorCap Rate CalculatorNOI CalculatorDSCR CalculatorLTV CalculatorDebt Yield CalculatorCash on Cash Return CalculatorYield Maintenance CalculatorIRR Calculator
About
About UsLeadershipTeamContactAffiliate Program (Coming Soon)We're Hiring
Get financing
Was This Article Helpful?
Newly Published
Jan 27 at Multifamily Loans
4 Steps to Increase Your Apartment Building's Occupancy
Jan 24 at Multifamily Loans
The 4 Best Multifamily Loans in 2023
Jan 24 at Multifamily Loans
Multifamily Minute Reader Reflections: The Best Approach for Investing in 2023
Explore the Janover Network
Jan 26 at Commercial Real Estate Loans
How Does ChatGPT Work With Commercial Real Estate?
Jan 25 at Commercial Real Estate Loans
Capital Gains Taxes in Commercial Real Estate
Jan 18 at Commercial Real Estate Loans
The Top 10 Markets to Buy Industrial Real Estate in 2023
Multifamily Finance Blog
Last updated on Dec 16, 2022
6 min read
by Jeff Hamann

How to Buy a Multifamily Property With No Money: 7 Options

Apartment buildings are expensive, but there are ways to get into the sector that won't break the bank. Find out seven techniques in our guide.

Apply for a loan in minutes and get multiple quotes today → Get Quotes

In this article:
  1. 1. Partner With Another Borrower
  2. 2. Provide a Share of Equity to Another Investor
  3. 3. Pursue Seller Financing
  4. 4. Get a Cash-Out Refi on Your Home
  5. 5. Take a Hard Money Loan
  6. 6. Invest in a Duplex or Other Small Property
  7. 7. Assume a Seller's Loan
  8. Conclusion
  9. Related Questions
  10. Get Financing

Buying a multifamily property can be a great investment for real estate investors, whether they’re new to the game or have decades of experience. A multifamily investor can take advantage of strong rental income while also reaping the benefits of increasing property values, making the multifamily sector a generally safe and even recession-proof investment play.

But multifamily properties come at a significantly greater cost than single-family homes. And down payments are generally a higher percentage of the purchase price, too. While getting a family member or a close friend to spot you part of the down payment for your first home may be technically possible, that gets a lot more difficult with multifamily — try going back and asking those same folks for a few hundred thousand or a million dollars for an apartment building.

If you’re hoping to get into the multifamily sector with little to no cash on hand, don’t let what I wrote above put you off. There are ways to get where you need to be, but it will take a bit of work. Broadly speaking, you’ll need to look for alternative sources of funding. Here are seven strategies you can use to buy a multifamily property with no money.

1. Partner With Another Borrower

The simplest way to purchase a multifamily property with no money is to find a partner who has the money to invest and can secure the financing. This partner could be a family member, friend, or an investor who’s a complete stranger. The two of you would then split the ownership and profits, and the partner would cover the entire cost of the down payment.

You could also ask a multifamily real estate professional to help you find a partner who is willing to finance the purchase. In this case, the professional would likely take a fee for their services.

Most investors wouldn’t do this without a good incentive, however — so find it. Be the partner responsible for property management, for example, and you’re bringing some potentially serious value.

2. Provide a Share of Equity to Another Investor

Another option for investing with no money is to offer a share of the property’s equity to a partner. The other investor would provide the money to finance the purchase, and you would receive a share of the equity based on the terms you set. 

This would mean selling at least part of your ownership in the community, which means a reduced return in absolute terms. That said, if it’s your first apartment building investment, it’s not an unreasonable compromise so you can get involved with little to no cash.

3. Pursue Seller Financing

Seller financing is when a buyer obtains a loan from the seller of the property. The terms of the loan would be set by the seller and could include monthly payments, an interest rate, and a repayment plan. This could be a good option if the owner is motivated to sell the property quickly and doesn’t need all of the purchase price upfront.

For example, let’s say you find a lender willing to finance 75% of the value of your $1 million multifamily acquisition. Great. But how do you get that remaining $250,000? If your seller is in a hurry — perhaps she or he needs to offload the property to pay down a balloon payment — they could offer the $250,000 as loan. Note this is a difficult thing to do in most circumstances, unless you have a very good relationship with the seller or have excellent timing for your purchase.

4. Get a Cash-Out Refi on Your Home

If you own a home, you may be able to use that equity to purchase a multifamily property. This could be a good option if you have enough equity in your home and can qualify for a loan. When you do a cash-out refi, you would borrow against the equity in your home, and you could then use the proceeds to cover the down payment on your multifamily property.

Note that this can be risky, especially in an environment where home prices are falling. If you take a larger refinancing on your home, you could end up underwater on that loan should the property decrease in value.

5. Take a Hard Money Loan

A hard money loan is a short-term loan that is secured by real estate — not by the finances of the buyer. These loans usually have much higher interest rates than traditional mortgages but can be approved quickly and with little documentation.

That said, these loans are typically used by experienced investors who can quickly fix and flip a property, or by investors looking to buy multifamily properties without the traditional requirements of an agency or bank loan. Finding a hard money loan which covers 100% of the property value is a difficult task, though. The asset’s fundamentals must be rock solid to even come close.

6. Invest in a Duplex or Other Small Property

If you’re strapped for cash and own a home, you could sell your property, buy a small apartment complex, and live in one of the units.

Duplexes and other small properties, such as fourplexes, can be a good option for investors who don’t have a lot of money to invest. These properties often require less money to purchase, and can be easier to manage than larger properties — all while still providing a decent return if managed well.

7. Assume a Seller's Loan

If a seller already has a loan on the property, you may be able to assume the loan. This means that you would take over the loan payments and the interest rate, while the original borrower is no longer responsible for the debt. This can be a good option if the onte has a low, fixed interest rate — and the loan is actually assumable. Some aren't!

Still, a loan assumption will rarely, if ever, cover the full asking price of the apartment building. That said, it can be a great tool in your toolbox, particularly if the seller has a HUD loan or another kind of super-competitive financing in place.

Conclusion

If you don’t have a lot of cash available to invest in a multifamily property, you have a lot of work ahead of you. However, there are options — especially depending on your network, if you own a home, and if you’re pursuing a property at the low end of the cost scale.

And even using any of the suggestions above, you’ll still need a loan to finance the deal. When investing in multifamily properties, having the right funding source is key. We can take you through your options; fill out the form below.

In this article:
  1. 1. Partner With Another Borrower
  2. 2. Provide a Share of Equity to Another Investor
  3. 3. Pursue Seller Financing
  4. 4. Get a Cash-Out Refi on Your Home
  5. 5. Take a Hard Money Loan
  6. 6. Invest in a Duplex or Other Small Property
  7. 7. Assume a Seller's Loan
  8. Conclusion
  9. Related questions
  10. Get Financing

Related questions

We’ve worked hard to build the most comprehensive source of information on multifamily financing in the world so you have it at your fingertips.

What is seller financing?
Seller financing is when a buyer obtains a loan from the seller of the property. The terms of the loan would be set by the seller and could include monthly payments, an interest rate, and a repayment plan. This could be a good option if the owner is motivated to sell the property quickly and doesn’t need all of the purchase price upfront.
What is a hard money loan?
A hard money loan is a short-term loan, typically with a term up to two or three years, that is secured by real estate. These loans usually have much higher interest rates than traditional multifamily mortgages but can be approved quickly and with little documentation.
What is loan assumption?
Loan assumption is a financing option that allows a buyer to take over an existing loan from the seller. This means that the buyer will be responsible for the loan payments and the interest rate, while the original borrower is no longer responsible for the debt. This can be a great way to purchase a multifamily property with no money if the loan has a low, fixed interest rate and is actually assumable.

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →
Janover logo

Multifamily Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487

hello@multifamily.loans

Site Information

Privacy Policy
Terms of Use

This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

Copyright © 2022 Janover Inc. All rights reserved.