How to Buy Commercial Property Without Using Your Own Money

by Nick GromickoCMI®

There is practically an unlimited amount of money available to those who wish to borrow it. There is so much money, in fact, that you can literally buy commercial property worth millions of dollars without having to use any of your own money. It doesn’t matter if you don’t come from wealth, and many multi-millionaire commercial real estate investors make their money by not using their own!
Consider these three strategies: 
  • Subordination, also known as creative financing, occurs when the current property owner takes out a second mortgage on the property to cover funds that the purchaser is not capable of raising him or herself. If you are lucky enough to find a seller who is willing to subordinate a second mortgage to cover what you cannot pay, then the only money spent from your own pocket will be a down payment. When using this method, it is a good idea to have the owner subordinate only for a short period of time -- just until you can take the money generated from the commercial property and pay off the second mortgage, leaving the owner free of the property. At this point, payment for the property can be transacted because you will have generated cash through the commercial property. This situation may seem backward at first, but it works rather well if you find an owner who is very motivated to sell and he or she understands this method of investing. In the end, you will have purchased your money-generating property with none of your own money, and the previous owner will get paid for their property.

    Beware that the property must support the debt, as you do not want the owner getting into financial trouble with the second mortgage. Some owners are wary of this type of investing because purchasers may break agreements, and problems occur. Try to be an investor of integrity in order to maintain a reputation of acting in the ways in which you and the seller agreed.

  • Use partners. If you are willing to do the work, there are experienced builders, investors and developers who will find the financing you need. The agreements can greatly differ, but your partner(s) will finance the deal and take a piece of the return that you create. Partners can offer invaluable experience and insight so that you can learn more about a specific type of property, and even the industry itself.
  • If you cannot secure a loan to purchase a large property, try buying a piece of it. From there, you can borrow money against that piece in order to purchase the entire lot. This strategy works especially well with raw land, but it can be used in many different situations. Owners may not be aware that this option exists, so be sure to mention it to them, especially when purchasing many acres of land.


Before making your commercial real estate purchase, be sure to have the property inspected by a certified InterNACHI inspector.  InterNACHI inspectors abide by a Code of Ethics and the International Standards of Practice for Inspecting Commercial Properties.  Your options for securing outside financing may be overwhelming, but getting a professional commercial property inspection done right doesn't have to be.