Can you buy rental property out of state with no money down?

I'm in NY but was approved for a loan in another state but was told I would have to put down 25% for 2 unit property and 30% if it's 3 or more units. Is this because I don't live in the state? Is there a way to buy rental property out of state with little or no money down?

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  • 1 month ago
    Best answer

    Rental property - non-owner occupied - always requires a far higher down payment than owner-occupied single-family home. The fact that you are out of state & will not be supervising tenants & property locally adds to the risk to the lender. Actually, those down payments sound a bit lower than typical. Usually minimum 1/3 (33.4%) down to 50% down.

    Low-down & no-down mortgages were the major cause of the housing market collapse & resulting bank failures in 2006-11. Even for owner-occupied single family home, do NOT expect to find no-down/low-down deals. And it would be extremely poor financial management on your part to attempt such deals. Good way to lose your house.

  • 1 month ago

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  • 1 month ago

    Think (!) If people could buy with zero down, everybody would be doing it ! {And many people would default after taking some of the rent money.}

  • Judy
    Lv 7
    1 month ago

    It would be very unusual to be able to buy rental property with no or little money down even if you lived in the state. Down payments and interest rates are typically higher for rental than for owner-occupied housing.

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  • Eva
    Lv 7
    1 month ago

    No it's not. They never fund non-owner occupied rental property at 100%. They want you to have some of your own money invested. It wouldn't matter whether you bought it in state or out of state. You would have to find a seller willing to hold the mortgage to get a low or no down payment and those are very difficult to find. They often need a lot of work as well and won't qualify for a conventional mortgage without being repaired and upgraded.

  • 1 month ago

    State lines are not the issue.

    There are NO lenders that will give you a 100% loan for rental property.

    If you don't live in the property, you don't have sufficient incentive not to just walk away.

  • 1 month ago

    it's because it's an INVESTMENT property.

  • Stoo
    Lv 7
    1 month ago

    No one on the level is going to give you a mortgage without money down. That's their collateral if the loan goes south - you've already paid a bit up front and the rest can be reclaimed through repossession. There are programs to help first-time home owners get a home with less money down - but for speculators and rental properties, no. If you don't have the money to get involved in real estate, probably best you don't try. If you can't find some money down, you won't be able to handle the many other costs of running a rental property. Many things can go wrong and the bills are sent to you - if you can't pay them you'll lose the property.

  • Greg
    Lv 7
    1 month ago

    That would be very, very difficult to do.

  • Maxi
    Lv 7
    1 month ago

    No, you will need a deposit regardless of where you purchase a property, unless the mortgage is for 100% and that in todays world is highly unlikely

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