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How Do "No Money Down" Property Investment Deals Really Work?

Updated: Mar 26, 2022

How Do "Zero Money Down" Property Investment Deals Really Work?
Are those property seminar ads just a gimmick?

Hello, and it's me again!

Over the past 1 week, it's been pretty tough getting stuck at home eh?

Maybe it's just me.. But suddenly, going out to work seems sooo much less tiring than staying home and juggling work with my 3+ years old little energizer bunny around.

So, if you've been reading my blog for awhile now, let me introduce you my boss.

zoom meeting funny
What happens at almost every Zoom meeting i do.

My wife and I both aren't what we consider the high energy type of people and we wonder what happened in our DNA mix that brought about this super high energy monkey.

Maybe it's precisely because he's born in the year of the monkey! But no.. that can't be it.. Or maybe it's because minus minus equals to plus! Horrors!

Or maybe because we prayed for God to give us more strength and energy before our kid came and this is His way of training us on what we asked for. - . - |||

Well anyway, if you're parents like us, and considered non-essential services for this Circuit Breaker period, then welcome to the club!

Hope you too are coping fine and "Staying Alive" like the Bee Gees.

But really, I do enjoy his "needing" me at this stage and am grateful that we get to spend more time together these days as I know some day I'll be the one who will be seeking for his company instead.

Anyway, you came here to read about how to buy properties with no money down so here are the mechanics and risks of each method.


How To Buy Properties With No Money Down?

There are a couple of ways that this can be achieved ranging from buying properties with built-in profits and gearing up, using other people's funds/names to truly no money down deals that come with other risks.

If you have read my previous post on How To Find Firesale Deals with Built-In Profits in this market, this is part 2 which carries on from there.

If you have not, I recommend that you start from there so that you can follow my train of thought.

Briefly for those TL;DR types, these are what real estate investment courses out there usually call “no money down” deals:

1. Taking out an equity loan (aka term loan, refinancing or gearing up) on your current property to re-invest.

2. Forming a company with investors to buy a commercial or industrial property.

3. Buying an undervalued residential property that allows you to gear up after completion and withdraw all your capital put in.

4. Buying a property under a younger borrower's name using the funds of an older investor.

5. Co-investing with close friends or family members by pooling funds.

6. Buying a property at a higher than market price and getting a guaranteed rental return.

If you're the type who likes long form explanations, carry on reading....


Mechanics and Risks of No Money Down Property Deals

1. Taking out an equity loan on your current property to re-invest


This is a very straightforward technique.

1st, you have to have a private or commercial property.

2nd, check with the banks for the equity that you can draw out through a term loan.

3rd, using the low cost of funds, re-invest for higher yielding/alpha properties under a trust or spouse's name.


1. Equity loans are not repayable with CPF so you have to ensure sufficient reserve funds to pay off installments.

2. Over-gearing used to be a high risk in the past where there was no Total Debt Servicing Ratio (TDSR) regulations in place. Nowadays, it's alot lower but you have to factor in the risks of losing your job or being disrupted by new technologies.

Shell We Buy A Property Together?

2. Forming a shell company with investors to buy a commercial or industrial property


By forming an investment holding company (IHC), investors can come together and co-own shares of the company that owns the property. The directors or major shareholders must take out personal guarantees on the property loan as there is no operating income.

The investors who put down the funds may require that those who put down no money, to be the guarantor for the loan. This helps the company qualify for maximum loan quantum and lower monthly installments.

Sometimes, a finder's share is also given out to the scout who labours over finding good deals, without needing to put money down.


In the event of default in loan payments, i.e. the property cannot be rented out, or if the market value were to drop drastically resulting in a margin call, the guarantor of the loan will have to shoulder the liability of payment or in a worst case scenario, have his personal assets seized by the bank and foreclosed.

leverage for good property investments
Gearing up for good deals?

3. Buying an undervalued/fire sale property that allows you to gear up after completion and withdraw your full down payment


The key to making this work is in finding properties that are selling at genuine fire sale prices.

Step 1: Buy property at a significant discount from valuation

Step 2: Take a no lock-in SIBOR loan so that you can refinance within 6-9 months without incurring loan redemption penalties.

Step 3: Refinance and gear up your loan and free up the "Built-in" equity and receive the capital you put in back into your pocket.

It requires alot of hard work to find such deals but if done right, this allows you zero money down in owning a property.


The usual risks of over-leveraging beyond your own financing capabilities apply and you will not be able to use CPF to repay the "geared up" amount of your loan.

buy property under younger borrower name

4. Buying a property under a younger borrower's name using the funds of an older investor


This method has been taught in some investment clubs but I do not recommend it.

It involves using the funds of older investors, who do not qualify for much loans or already have multiple properties to their names, and the names of younger investors who conversely do not have much funds but are eligible to buy without additional buyer stamp duties, or take out longer loan tenures.

Privately, they have a prepared and signed agreement that states the shares and profit sharing split when the investment is divested.


As this method is considered an arrangement to avoid stamp duties, it is illegal and legally void. As such, the investor who puts in his funds may lose everything as an illegal contract cannot be upheld in court.

property co-investing with friends family

5. Co-investing with close friends or family members by pooling funds


Happens when close friends or family members pool funds together to buy a residential property.

As some of them might already have properties, they will buy it under the one who has no properties, and in return give him or her some shares of the property.

Similar to the previous point, there will usually be some form of written agreement to stipulate how proceeds are shared when the property is finally sold.


This method is similarly considered an arrangement to avoid stamp duties and is illegal and legally void.

Hence, if they fall out with each other, there will be no recourse for those who have entrusted their funds to owner of the property.

6. Buying a property at a higher than market price and getting a guaranteed rental return


This method functions similar to how a car overtrade works where the value is inflated to the banks so that the loan disbursed covers the entire "actual" sale price and no cash is hence required from the buyer.

Usually, such properties are found overseas as Singapore's strict banking regulations prevent this from happening.

Developers provide guaranteed rental returns (GRR) usually do so when the take up rate of their projects are not as fast as they would like it to be.


In order to provide a GRR that is attractive, developers would usually have to inflate the selling price. Hence, buyers are advised to do their own assessments of market prices of comparable projects in the vicinity so that they can forecast their exit plans feasibility.

A bigger risk is the robustness and credibility of the firm making the guarantee as it is possible that the rental payments stop coming in after the 1st few months or years.

Historically, there has been many cases of terminated GRR schemes that resulted in costly lawsuits and heartache for investors so beware.



So, do “no money down“ property investment deals really exist in real life?

The answer is yes! But most of them except methods 1 and 3 are not worth pursuing unless its with family or friends that you can trust unreservedly.

Hope you found this article useful in becoming a more discerning investor yourself and share it with your friends who are interested in learning more about property investments!

All the best and stay home so that we can all resume our lives as per normal ASAP!


Need an opinion on your property investment plans, the best buys available or help marketing your properties?

Get a 1-time free 30 min Property Wealth Planning consultation with Stuart and his team of Property Wealth Planners. Schedule one right now.

A PWP consultation includes:

- An in-depth financial affordability assessment and timeline planning

- Highly relevant investment insights

- A clear and customised investment road map

- A curated list of best buys in today's market with good growth potential & minimal risks

- Selecting units with the highest potential in a new launch project

- Advice on marketing and getting a buyer for your property fast

- Has your property stagnated in price? What are the reasons and options you have?

stuart chng property agent

Stuart Chng, Executive Group District Director at Huttons, is a renowned leader and personality in the real estate industry.

He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.

Professionally, he is a licensed real estate agent, an avid stocks, options and real estate investor, business owner, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.

Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here.

Stuart has also coached many top million dollar producing agents from different real estate agencies in Singapore. Read his agents' reviews here.

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