How to Buy Your First Rental Property Without a Huge Down Payment

Smart Strategies for First-Time Real Estate Investors in 2025

Owning rental property is one of the most powerful ways to build long-term wealth. But let’s face it—coming up with a large down payment can feel like a major hurdle, especially for first-time investors.

The good news? In 2025, there are several creative and legitimate ways to buy your first rental property without breaking the bank.

Here’s how.

1. House Hacking: Live in One Unit, Rent the Rest

One of the most popular low-cost strategies is house hacking.Buy a duplex, triplex, or fourplex, live in one unit, and rent out the others.

Why it works:

• You may qualify for owner-occupied financing, which requires as little as 3.5% down (FHA) or 5% down (conventional).

• Rental income from the other units can help cover your mortgage.

• Once you move out, you own a fully rented investment property.

2. Use FHA or VA Loans (If You Qualify)

FHA Loan (3.5% Down):

• You can use an FHA loan to buy a 1–4 unit property as long as you live in one unit.

• Great for buyers with lower credit scores or limited savings.

VA Loan (0% Down):

• Available to eligible veterans and active-duty military.

• No down payment or PMI.

• Can also be used on multi-family properties (up to 4 units) if owner-occupied.

3. Partner With an Investor

If you don’t have the funds, but do have time, knowledge, or access to good deals—partnering can be a win-win.

Common partnership setups:

• You find and manage the deal; they bring the down payment.

• You both split cash flow and equity based on agreed terms.

• Always use a legal agreement (LLC or joint venture) to protect both parties.

4. Look Into Seller Financing

Some sellers are open to carrying the loan themselves, especially if:

• They own the property outright

• They want a monthly cash flow instead of a lump sum

You may only need a small down payment or even negotiate a zero-down structure depending on the deal.

5. Use the BRRRR Strategy

BRRRR = Buy, Rehab, Rent, Refinance, Repeat

Here’s how it works:

• Buy a fixer-upper at a low price (ideally with creative or private financing)

• Rehab the property and increase its value

• Rent it out and stabilize income

• Refinance to pull out your equity

• Use the equity to fund the next property

This method allows you to recycle your original capital over and over.

6. Explore Down Payment Assistance or Grant Programs

Some cities and states offer first-time buyer or investor programs that include:

• Down payment grants

• Low-interest loans

• Tax abatements for rental housing development

Check with your local housing authority or bank about options available in your area.

7. Use a HELOC or Cash-Out Refi from Your Primary Residence

If you already own a home:

• A Home Equity Line of Credit (HELOC) or

• A Cash-Out Refinance

…can give you the funds for a down payment on a rental without selling assets.

Make sure the rental’s income can cover both the new mortgage and the HELOC repayment.

Final Tips for First-Time Rental Buyers

• Run the numbers: Ensure cash flow covers your expenses and includes a reserve.

• Have a plan for vacancies, repairs, and property management.

• Work with a real estate agent or mentor who understands investment properties.

• Start small: Even one rental property can change your financial future.

Final Thoughts

You don’t need ₱1 million or more in the bank to get started in real estate investing. With the right strategy, a bit of creativity, and a strong financial game plan, you can buy your first rental property in 2025—even without a huge down payment.

Want help evaluating a deal or choosing the best financing option? Let’s connect and build your investment game plan.