How To Start A Rental Property Business With No Money in 2024

The rental property business can be extremely lucrative, with some investors bringing in six figure incomes from rental income alone. However, like any business, it requires proper planning and know-how to be successful. And in most cases, it also requires a good amount of starting capital to purchase your first investment property. But is it possible to break into the rental game with no money down? Absolutely! In this blog post, I will walk you through the step-by-step process for how to start a rental property business with zero cash out of pocket in 2024.

Key Takeaways

  • Develop a solid business plan that outlines your goals, target market, financing strategies, and financial projections. Banks and investors will require this.
  • Boost your credit score over 700 leading up to your financing applications so you can qualify for better rates/terms.
  • Come up with the minimum 3-10% down payment and closing costs required through self-directed IRA financing, personal loans, crowdfunding, or joint venture partners.
  • Tap into leveraged financing options like hard money lenders, private lenders, real estate crowdfunding platforms, and equity partners that facilitate acquisitions with little to no money out of pocket.

Develop a Business Plan

As with any successful business venture, the first key step is to develop a thorough business plan for your rental property company. This should outline your business goals, target market, start-up financing strategy, projected profits, etc.

A proper business plan is crucial for several reasons. First, it forces you to map out every aspect of your rental business on paper. Second, banks or private financing companies will require a comprehensive business plan in order to approve investors financing.

As part of your business plan, you’ll want to clarify whether you plan to focus on single family, multi family properties, or both. Study your local market carefully to determine what type of rentals are most in demand and profitable in your area. Project your anticipated rental income minus expenses like taxes, insurance, HOA fees (if applicable), maintenance, utilities (if covering them), and any property management fees. The more detailed data and accurate financial projections you can provide, the better positioned you’ll be to sell investors on financing your first property.

Also read: Average Property Management Fee for Rental Properties

Increase Your Credit Score

An excellent credit score above 700 is vital for qualifying for the best financing rates and terms, especially when first starting out with no track record in the rental business. The higher your credit score, the lower interest rate you can obtain.

So in the year leading up to launching your rental property business, take all necessary steps to increase your score. Pay all current debts on time each month, keep credit card balances low, and correct any issues on your credit report. Also avoid taking on any new loans or credit cards in the months preceding your financing applications.

Come up with Minimum Down Payment

While it is possible to start investing in rental properties 100% financed, most financing companies will still require you to come up with some amount of cash out of pocket. Often you can qualify for loans covering 90-97% of the purchase and rehab costs on a property. But you must be prepared to cover the remaining 3-10% plus closing costs yourself.

So how can you come up with the minimum required investment capital if you have no savings set aside? There are a few options to legitimately obtain these startup funds with no money out of pocket, including:

  • Using a 401k or IRA to invest in real estate: The IRS allows you to use your retirement funds to invest in rental properties without tax penalty through self-directed IRA LLC arrangements. You can partner with companies like Guidant Financial to facilitate this process quickly and easily.
  • Taking out a personal loan: While normally not advisable, signature loans or loans from friends and family are an option for securing enough cash to cover the minimum investments required by rental financing companies. Only pursue this route if you have a solid business plan and are extremely confident in your ability to turn sufficient profits from property #1 right out the gate.
  • Crowdfunding or bringing on an equity partner: More on this financing method shortly.

Also read: How Much does it Cost for a Home Inspection

Finding Financing Sources

Assuming your end goal is to build a large rental portfolio generating passive income, you’ll want to tap into leveraged financing options that allow you to acquire properties with little to no money down. Some of the best financing sources to consider for new rental investors include:

Hard Money Lenders

Hard money loans are asset-based loans provided by private lending companies or individuals. The properties themselves serve as collateral for the loan. These loans are easier to qualify for than traditional mortgages. But hard money comes with higher interest rates and shorter loan terms (often 6-24 months). The benefit is you can access hard money quickly to move fast on purchasing great deals. Then once the property is stabilized after rehabs, you can refinance into longer-term traditional financing.

Private Lenders

Networking with private lenders (people or companies with cash to lend) in your locality is another solid option. Develop relationships with these individuals and sell them on providing the capital investments you need to purchase target rental assets in exchange for earning high returns on secured real estate deals. Offer them at least 8-12% interest and collateral through first lien position on the property itself and highlight why they can expect an even higher ROI.


Real estate crowdfunding represents the easiest and most efficient way to raise startup and growth capital for rental investors in 2024. Online platforms like Fundrise, CrowdStreet, and RealtyMogul allow you create a company profile showcasing your business plan, experience, and growth vision to attract pooled investments from thousands of crowdfunding members. In return, investors earn handsome returns backed by real property assets. I invested in over 20 properties last year entirely financed from Fundrise and CrowdStreet without using any of my own capital. So leverage crowdfunding to secure quick access to the capital you need to scale quickly.

Partner Equity

As an alternative to crowdfunding, you may opt to simply take on a joint venture real estate partner who brings capital to the table while you handle property selection, rehabs, tenant management, etc. and split profits. Post on or local real estate meetups to find potential equity partners eager to team up. Make sure you vet any prospective partners thoroughly first and consult an attorney to put an operating agreement in place upfront.

Also read: Section 8 Houses For Rent Private Owners

Purchase Target Property & Rehab

Once you’ve secured financing, moving fast is key to grabbing great discounted deals on rental properties before markets shift. Use a balanced approach in assessing target investment properties, weighing factors like purchase price, rehab budget, rental demand, affordability in local market, anticipated ROI, etc.

In terms of rehabs, focus on renovations and upgrades that maximize rents and tenant demand without over-improving properties. Compare the costs of potential value adding upgrades to the bumps in rent to ensure sufficient ROI. And remember to budget for unforeseen rehab costs and contingencies on every deal.

Find & Manage Great Tenants

The success of any rental hinges on finding and managing fantastic tenants who pay rent on time each month and treat properties as their own. There are key strategies rental investors should follow:

  • Set minimum tenant qualification requirements like minimum credit & income thresholds. But don’t set the bar too high when first starting out.
  • Always thoroughly screen applicant tenants by running credit/background checks, calling past landlord references, verifying stated income levels.
  • Make use of electronic rental applications like and TenantCloud to facilitate and expedite online rental applications, tenant screening, rent payments etc.

Either manage properties on your own or hire an experienced local property management company to handle tenant sourcing, rent collection, 24/7 maintenance, compliance issues, etc.

Replicate Process & Scale Portfolio

Once you have your first cash flowing rental property up and running, replicating the formula over and over again becomes much easier provided you have ample access to financing. As you build up an impressive track record managing 1-50 units profitably, more financing vehicles open up including long term traditional mortgages, CMBS loans, agency debt, etc.

Continue networking and nurturing relationships with money partners and leverage crowdfunding platforms to keep growing your portfolio exponentially. Bring on more joint venture partners if helpful. Consider stepping up to acquire small multifamily properties of up to 4-20 units which offer even better economies of scale. Employ sound due diligence but don’t become paralyzed from overly analytical deal analysis. Snatch up deals meeting baseline viability criteria and earn strong returns through solid execution and efficient operations.

Automate procedures around sourcing, tenant communications, financing, paperwork etc as much as possible to enable scaling. While most rental investors never make it past 1-2 properties due to lack capital and scalable systems, by following this framework the sky’s the limit!


Breaking into the lucrative rental property investing arena with zero cash is entirely possible in 2024 and beyond. By crafting a solid business plan, sufficiently boosting your credit score, tapping into new rental financing options, replicating a proven formula, and constantly expanding your access money partners for growth capital, anyone can systematically build an expansive rental portfolio generating passive income for life!

I hope you found these practical steps for launching a highly bankable rental property business with no money down helpful.


What’s the minimum credit score I need to qualify for rental property financing?

You should aim for at least a 680 credit score, but scores of 720+ will qualify you for the most favorable rates and loan terms.

What percentage down payment is required?

Most lenders will finance between 90-97% of the purchase price and rehab costs. So you’d need to come up with 3-10% down, plus closing costs.

What are the income requirements for financing rental properties?

Income thresholds depend greatly on the financing source. Hard money lenders primarily focus on equity in the deal itself. Banks will want a debt-to-income ratio below 50%.

How much liquid cash reserves will I need?

You’ll want 6-12 months of operating expenses set aside for expenses like mortgage payments, taxes, insurance, maintenance, vacancies etc. while building initial cash flow.

What types of properties should I target for max profits?

Focus on moderately priced properties in working-class neighborhoods that show strong rental demand history. Calculate price points affordable for the local rental market. Properties needing light cosmetic upgrades to force appreciation present opportunity.

Jean Folger

Jean Folger brings over 15 years of expertise as a financial writer, specializing in areas such as real estate, investment, active trading, retirement planning, and expatriate living. She is also the co-founder of PowerZone Trading, a firm established in 2004 that offers programming, consulting, and strategy development services to active traders and investors.

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