You can buy and sell a house with no money down by replacing cash with a contract, someone else’s loan, or the property itself as collateral. Investors do this through five methods: assigning a purchase contract to another buyer, closing two back-to-back sales in a single day, having the seller finance you directly, taking title while the seller’s existing mortgage stays in place, or borrowing against the property’s value and filling the gap with a private partner. None of them are truly free. Each swaps a down payment for a different cost, a different risk, and a different tax bill.
Assign the Contract to Another Buyer
Contract assignment is the cheapest way in because you never actually buy the house. You sign a purchase agreement with the seller at one price, then sell your right to close on that agreement to another buyer for a fee. Your profit is the spread.
The whole strategy depends on one phrase in the contract. The buyer line has to read something like “Buyer and/or assigns,” which is what lets you transfer your rights to someone else. Without it, most sellers and title companies will treat the contract as non-transferable, and you’ll be stuck closing yourself or walking away from your deposit.
Once you find an end buyer willing to pay more than your contract price, you sign a separate assignment agreement identifying the original contract, the property, and your fee. The title company pays your fee out of the closing proceeds. Title moves directly from the seller to your end buyer. You never take ownership, never get a mortgage, never wire a down payment.
The one cost you can’t skip is earnest money. Sellers expect a deposit to show you’re serious. In wholesale deals it tends to be small, sometimes a few hundred dollars, though some sellers push for more. That deposit is your only capital at risk, and you lose it if you can’t find an end buyer before the contract deadline.
Two things trip up new wholesalers. You’re marketing your contractual interest, not the property, and a growing number of states require you to say so plainly in any advertising. You also need to move fast, because most wholesale contracts include a short inspection or option period. Tie up properties repeatedly without closing and sellers will stop taking your calls.
Close Twice in One Day
A double closing gets you to the same result as an assignment, but it hides your profit from both the seller and the end buyer. Instead of one closing showing your fee on the settlement statement, two separate closings run back to back, often hours apart. You buy from the seller in the first transaction and immediately sell to your end buyer in the second.
The obvious problem is that you need money to close the first deal, even briefly. Transactional funding fills the gap. These are ultra-short-term loans built for same-day closings. The lender wires funds to the title company for your purchase, and the end buyer’s funds pay off the transactional lender minutes or hours later. Fees generally run between 1% and 3% of the loan amount, and lenders usually want proof that you already have a signed contract with the end buyer before they’ll commit.
The title company prepares two separate settlement statements so the numbers on each transaction stay walled off from the other. Your seller sees only their sale price. Your end buyer sees only their purchase price. Your profit is the difference minus the transactional fee and closing costs. It costs more than an assignment, but it works when the original contract can’t be assigned or when you don’t want either party seeing your spread.
Have the Seller Finance the Purchase
Seller financing removes the bank. You make payments directly to the seller over time, and two documents make it enforceable: a promissory note stating the loan amount, interest rate, payment schedule, and default terms, and a mortgage or deed of trust recorded against the property that lets the seller foreclose if you stop paying.
This works best when the seller owns the property free and clear, because there’s no existing loan complicating the picture. You negotiate the down payment, rate, and term directly. Some sellers will accept little or no money down if the price or interest rate compensates them. Once the documents are signed and the deed is recorded with the county, you own the property.
Most seller-financed notes include an acceleration clause. Miss payments or breach another term and the seller can demand the entire remaining balance immediately, not just what’s past due. If you can’t pay in full, foreclosure follows. The seller doesn’t have to wait months; a single material breach can trigger acceleration, though most sellers choose whether to invoke it rather than having it fire automatically.
Take Title Subject to the Existing Mortgage
In a subject-to deal, you take ownership while the seller’s existing mortgage stays in place. The deed transfers to you. The loan stays in the seller’s name. You make the monthly payments going forward, and the seller walks away from a property they likely couldn’t afford to keep.
The appeal is that you inherit whatever rate and terms the seller locked in, which can be far better than what’s available today. You also skip the credit checks, income verification, and fees of a new mortgage. The seller signs over the deed and authorizes you to communicate with the lender about the existing loan. Once the deed is recorded, you control the property, and you can rent it, renovate it, or resell it.
The Due-on-Sale Clause
Almost every mortgage written in the last several decades includes a due-on-sale clause that lets the lender demand full repayment if the property changes hands without their approval. When you record a new deed in your name, the lender has the legal right to call the entire balance due.
In practice, many lenders don’t enforce this as long as payments arrive on time. But “many don’t” is not “none will,” and if the loan is called, you’ll need to refinance, pay it off, or lose the property. Federal law protects specific transfers from due-on-sale enforcement, including transfers to a spouse or children, transfers resulting from a divorce, transfers into a living trust where the borrower remains a beneficiary, and transfers on the death of a joint tenant.1Office of the Law Revision Counsel. 12 U.S. Code 1701j-3 – Preemption of Due-on-Sale Prohibitions A standard investor purchase through a subject-to agreement does not fall into any of those categories.
There’s a second risk that sits on the seller. The loan stays in their name, so if you miss a payment, it hits their credit. That’s why sound subject-to agreements spell out that you’ll keep insurance and taxes current, make every payment on time, and often refinance within a set window to get the loan out of the seller’s name.
Borrow Against the Property and Bring in a Partner
Asset-based lenders, commonly called hard money lenders, decide based on the property’s value rather than your income or credit. They focus on the after-repair value, meaning what the property will be worth once renovations are done. Most will lend up to 65% to 75% of that projected value, which usually covers the purchase price and sometimes part of the renovation budget.
Whatever the hard money loan doesn’t cover, a private capital partner does. The partner puts up the remaining cash for closing costs, repairs, or holding expenses in exchange for a share of the profits. A written joint venture agreement covering each partner’s contribution, responsibilities, and share of proceeds is not optional. Without one, a dispute over money ends the partnership and can land you in court.
Hard money is expensive. Interest rates run several points above conventional mortgages, and most loans carry origination fees of 1 to 3 points on top. Terms are short, usually 6 to 18 months, and the lender expects a clear exit plan before funding: selling the renovated property, refinancing into a conventional loan, or paying off with proceeds from another deal. If you can’t execute the exit and the loan matures, the lender forecloses.
Costs You Still Pay Out of Pocket
“No money down” refers to the purchase price. It doesn’t mean no money at all. Every strategy above involves smaller costs that catch first-timers off guard, and ignoring them is the fastest way to lose money on a deal that looked profitable on paper.
- Earnest money deposit, required for assignment and double-closing deals to make the contract binding. In wholesale deals this can range from under $100 to several thousand dollars depending on the seller and local norms.
- Transactional funding fees on double closings, at 1% to 3% of the funded amount.
- Deed recording fees charged by the county each time a deed or mortgage is recorded. These vary by jurisdiction but commonly land in the range of a few hundred dollars per document.
- Title insurance and title search fees. In a double closing, you may pay these twice.
- Attorney fees. Roughly half of all states require an attorney at closing. Even where optional, having one review your contracts is worth it when the deal structure is creative. Standard closings typically run $500 to $2,000, more in complex transactions or high-cost markets.
What You’ll Owe in Taxes
Every strategy above produces taxable income, and the treatment depends on how you structured the deal.
Assignment fees are taxed as ordinary income at your regular rate. The IRS generally treats wholesaling as a business activity rather than a passive investment, so those fees are also subject to self-employment tax of 15.3%, covering Social Security and Medicare. On a $15,000 assignment fee, combined federal and state taxes can reach $6,000 or more. Setting aside 35% to 40% of every fee for taxes is a reasonable starting point.
Properties bought and resold through double closings or hard money loans get similar treatment if you hold them under a year. Short-term capital gains are taxed at your ordinary income rate, and frequent flipping can cause the IRS to classify you as a dealer rather than an investor, which strips you of capital gains rates on any of your properties. Hold longer than 12 months and profits qualify for long-term capital gains rates, which are meaningfully lower for most taxpayers.
Seller-financed and subject-to deals held as rentals produce rental income with its own reporting rules. Mortgage interest, property taxes, insurance, repairs, and depreciation are deductible, but the rules run deep enough that working with a tax professional familiar with real estate is worth what it costs.
Disclosure and Licensing Rules for Wholesaling
The legal ground under wholesaling has shifted in recent years. A growing number of states now require wholesalers to give sellers a written disclosure before signing a purchase agreement. These disclosures typically must explain that you’re a wholesaler, that you may assign the contract, that the seller may be receiving below-market value, and that the seller has the right to consult an attorney. Some states make the contract voidable if you skip the disclosure, meaning the seller can cancel any time before closing without penalty.
Licensing is the murkier question. In most states you don’t need a real estate license to wholesale so long as you’re selling your contractual interest rather than acting as a broker for someone else. The line isn’t always clean. Several states have tightened their definitions of brokering, and if you’re advertising the property for sale rather than your contract for assignment, collecting fees from both sides, or negotiating on behalf of a third party, you may be doing work that requires a license. Check your state’s real estate commission rules before your first deal.