What can you do if, after taking stock of the more "traditional" means of generating funds to purchase investment real estate, you find that none of them is right for you? There are, indeed, ways to buy property with very little or no money down. It's quite likely that you've seen a late-night infomercial or two touting the ease of these concepts. Well, the truth is that they can be done. The further truth, however, is that they are not easy. No-money-down deals typically involve a considerable amount of risk and, as such, deserve a great deal of evaluation and care. They're also incumbent upon finding an owner who's willing – or can be persuaded – to sell on such terms. In short, they're easier said than done. If they weren't, everyone would be doing them. But they can be put together, and here are just a few methods:

Option contract - An option contract is simply a contract between a prospective buyer and seller that provides the buyer with an option to purchase the seller's property within a given period of time. As consideration for the option, the buyer pays an agreed-upon sum of money that's non-refundable should he or she choose not to exercise the option to purchase the property. If the buyer decides not to purchase the property, the 'option money' is forfeited, going to the seller. If the buyer chooses to exercise the option, the money becomes part of the down payment.

An option is a unilateral contract, which means that all rights to buy or not buy the property belong to the option purchaser. Once the contract is executed, the seller has absolutely no more control over the sale. For this reason the seller will often request a fairly substantial option deposit. The contract, in effect, forces the seller to take his or her property off the market for a period of time, at the end of which it still may not be sold – depending upon whether the buyer decides to exercise the option to purchase the property or not.

An option contract can be an invaluable tool for a prospective buyer. For example, you might find a property that you're very interested in, but at the present time your available cash may be limited. However, you know that in just a few months you'll have enough cash available to purchase the property. Or perhaps you might be waiting for another property that you own to sell or close. Your money might also be temporarily deposited in time certificates or other vehicles, and withdrawing the funds prior to maturity would result in substantial interest penalties. Whatever the case, you don't want to lose your opportunity to buy the investment property in the meantime, so you use an option contract to gain control of, or tie up, the property.

Lease with option to buy - A property owner who's highly motivated to sell may consider leasing his or her investment property to a prospective buyer and giving the buyer an option to buy the property at an agreed-upon date in the future. This type of transaction can be used very effectively when a seller needs to get out of the ownership or management of his or her property, perhaps due to illness or relocation from the area. The purchaser agrees to lease the property for a specified period of time, while preparing financially to purchase it. Depending upon the contract terms agreed to by both parties, part of the lease payments might be applied toward the down payment.

Contract for deed - The contract for deed is very similar to the lease option, with the exception that there's no option involved. It basically works in this manner: instead of optioning it, the buyer agrees to purchase the property, but typically doesn't have the necessary cash to do so. Likewise, the owner agrees to sell his or her property to the buyer. The buyer may give the seller a small cash down payment, but title to the property remains in the seller's name. The balance of the required down payment will come from the lease payments that the buyer makes to the seller. An agreed-upon portion of the lease payments will apply toward the down payment (perhaps as much as fifty percent). When the full required down payment amount has been accumulated from the lease payments, title to the property is transferred to the buyer.

This type of purchase can actually be looked upon as a savings plan in which the buyer is adding to his or her real estate investment. During the savings period, the buyer is also realizing the appreciation and principal-reduction benefits produced by the property.

Distressed properties - A distressed property is one in which the present owner – for whatever reason – has gotten into trouble and needs or simply wants very badly to sell. But just because the owner is anxious and wants out of the property doesn't mean that you should automatically jump into it without careful analysis to determine if the property has investment potential. If it does, you can try to convince the owner to sell you the property with no money down and carry back a mortgage for the difference between the existing financing and your agreed-upon price.