How to Invest in Real Estate with No Money

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In typical fashion, I couldn’t get to sleep.

I had consumed enough caffeine to wake a sleeping bear and was stuck staring at the ceiling, waiting for my dreams to start – to no avail. As was the tradition most of those nights during college, I flipped on the television in an effort to numb my mind enough to try again later.

Passing quickly through a few “made for tv movies” (which I’m sure were stellar…) and growing tired of the depressing nature of the cable news networks, I settled upon a reality television show where the star turned an ugly, dilapidated home into a beautiful work of art, complete with furniture and wine.

Wow.

I knew nothing about construction, real estate, investing, or money – but something about watching that transformation amazed me. Even more – at the end of the show the home was sold for a $20,000 profit! I was hooked. The more I watched, the more interested I got and I realized two things:

  1. I knew I needed to get into real estate investing
  2. I knew I had ZERO cash.

Thus began my journey into real estate investing and my quest to do as much as I could with as little as possible. Maybe this sounds familiar to you, and you know that real estate is the vehicle you want to drive to reach financial independence, but you don’t have the cash either. Hopefully this post can help shed some light on the subject. Over the past seven years, I’ve learned numerous different ways on how to invest in real estate with no money – and this post highlights my favorite!

f8e37d4f-no-money-3d-book-cover-png_0aj0f60aj0f6000000*** Special Note from the Editor: Due to the mass popularity of this blog post, we’ve turned this into an entire book!  Click here to order your own copy of The Book on Investing in Real Estate with No (and Low) Money Down!****

1.) Forget Investing: Try Working First

The first, and easiest way to get into the real estate investing field is by … not investing?

That’s right. When you are just getting started, and you don’t have any money – one of the best ways to build up your income, increase your knowledge, and make connections is by working in the field of real estate without actually investing. There are dozens of different jobs you can use to get in the field – such as:

  • Real Estate Agent
  • Appraiser
  • Title Company Rep/Escrow Officer
  • Construction Worker
  • Project Manager for an Investor
  • Assistant to an Investor
  • Intern
  • and many, many more

The obvious benefit of this kind of work is that you are able to learn about the business while earning an income. For many, who simply jump into real estate investing, they actually lose a lot of money in the beginning. Additionally, you can earn money while meeting influential people who can help you out later on your journey.

2.) Wholesaling

Wholesaling is one of the most popular ways to jump into real estate investing, and for good reason: a wholesaler is someone who gets paid for finding great deals. In an ideal wholesale deal, the wholesaler will find a property and sign a legal contract with the seller for a certain purchase price. The wholesaler will then find a buyer and simply “sell the contract” to the buyer for a set fee, ranging from $500 to $10,000 or more depending on the strength of the deal.

The benefit of wholesaling is that very little money is needed, because the wholesaler is not actually purchasing the property. The wholesaler is simply pushing paper and becoming the “middle man” – bringing together a buyer and a seller and working their fee into the deal. A good wholesaler can make a great income while making connections in the business and learning valuable lessons on finding great deals.

While wholesalers do not need the actual purchase money to buy the property, they do need to consistently keep their pipeline full of deals which can require either a cash for marketing or a lot of time for door knocking and networking to consistently find those deals.

If you are interested in wholesaling, be sure to check out these three articles on wholesaling:

3.) Partnerships

Have you ever put together a puzzle and found one piece missing at the end? Frustrating, isn’t it? Money is just one puzzle piece for a great real estate investment – so if you can be sure to round out the rest of the puzzle, often times you can partner with someone who has that piece but might be lacking in another area.

Partnerships are very common in real estate investing for one major reason: everyone has something that they lack. If you can fill the void in someone’s investing plan, perhaps they can fill the void (money) in yours. The key, however, is having something you can bring to the table. Do you have the deal-making ability? How about the time/skills to remodel a property? Experience? Contacts?

Take an inventory of what “puzzle pieces” you do have, and work hard at strengthening those.

For more info on partnerships, check out:

Partnerships: The Benefits of Teaming Up in Real Estate Investing

4.) The Lease Option Sandwich

The Lease Option Sandwich is a method used by many investors to build wealth without dealing with loans or money. Before diving into the details on how to make a lease-option “sandwich,” first let me explain what a “lease option” is. A lease option, aka lease-purchase, is actually 2 separate legal agreements combined in one transaction:

  1. A lease and
  2. An option.

There is a good chance you’ve heard of this strategy before from it’s more “street name:” Rent to Own.”

The lease is like any other rental agreement, whereby a tenant rents a home. An Option is a legal document that gives an individual the sole right to purchase that property for a pre-determined price within a pre-determined time frame. I know, that’s confusing – let me give you an example:

Investor Ike offers his tenant, Tenant Tom, a lease-option on a property Investor Ike owns. In the lease paperwork and the option paperwork, Investor Ike specifies that Tenant Tom has three years to buy the property for $100,000. During this time, Tenant Tom pays rent to Ike and attempts to obtain a mortgage from a bank, to pay Ike the full amount needed. Also during this time, Investor Ike cannot sell the property to anyone else, because Tenant Tom has a legal “option” to buy it.

A lease option sandwich uses the same concept but adds a twist – the property is never actually owned by Investor Ike. Instead, Investor Ike finds a property from a seller – Suzy Seller- and signs a “lease option” with Suzy, for lets say “5 years.” During this 5 years, Ike has the legal option to buy the property for $80,000 and will pay $500 per month. Investor Ike then goes out and offers this property to Tenant Tom for 3 years, and charges a slightly higher rent rate and purchase price ($100,000 and $800 per month) than he has agreed to pay pay Suzy Seller. Essentially, Investor Ike is the middleman, collecting an extra $300 per month in income each month and $20,000 when/if Tenant Tom comes up with the money to buy it.

A lease option sandwich can be a great strategy to get into real estate with minimal risk and cash, but be sure to research all the ins and outs of the business before jumping in, as it is one of the more complicated methods of investing.

For more info on Lease Options, check out Rent to Own Homes: How to Profit from a Lease Purchase

5.) Hard/Private Money

Finally, perhaps the most well known method of investing in real estate without a lot of cash is through the use of “hard money” or “private money.” These loans are not given from banks, but from wealthy individuals or corporations established for such a purpose. These loans are not for home-owners, and are very short term (less than 2 years, sometimes as short as 6 months) and carry high fees and interest rates. However, for a short term fix-and-flip or buy-and-refinance – these loans can be exactly what’s needed.

The major benefits of hard money is that it is quick, easy, and the qualification standards are focused much more heavily on the deal rather than the borrower. This means if you don’t have a lot of cash or great credit BUT you’ve found a killer deal, you can probably get the deal funded. Some hard money lenders, if the deal is good enough, will lend the entire purchase price and repairs needed – allowing you to invest with no money. This is generally the exception, however, and not the rule; most hard money lenders or private lenders like to see some “skin in the game” (something for the borrower to lose, to incentivize the borrower to succeed.)

If you are looking for a hard money lender – BiggerPockets has the most comprehensive database ever assembled of hard money lenders, and the list is growing every day! Check it out here. Also, for an incredible hour-long discussion with a real hard money lender about how to profit using hard money, be sure to listen to Show Nine of the BiggerPockets Podcast!

Bonus Methods for Investing in Real Estate Without Money

The previous five methods are used every day by investors to maximize the amount of investing they can do without using all their cash. Each method has it’s benefits and drawbacks, and as you get more and more involved in real estate investing you will learn to decide which method works best for which scenario. However, before I leave you, I want to share one more “bonus” way to invest with no money:

Combining these methods.

That’s right – real estate investing is about being creative and these methods are open to some interpretation and experimentation. Perhaps you can use both a partner AND hard money? Or perhaps you can use your career in the real estate business to help find deals to wholesale? Maybe even your wholesale deal can be your missing puzzle piece in a great partnership?

The point is – you can invest in real estate without any money – but you need to be creative, do your homework, and have a clear understanding of how the game of real estate is played. The best way to do this – you are actually already doing: Studying. Reading blogs and books, listening to podcasts and radio shows, watching flipping shows and HGTV, and interacting with real seasoned investors on a daily basis will help you get going.

Learning how to invest in real estate with no money isn’t impossible, but it does take some work and education. Don’t let your lack of income be an excuse to not invest. Get out there and start using your head in the place of cash – and you’ll do wonders.

What do you think? Are there any other methods of “no money down” real estate investing you can add or any questions you need clarification on? Leave a comment below!

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About Author

Brandon Turner (G+) is the BiggerPockets.com Senior Editor and Community Director. He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

64 Comments

  1. Thx Brandon! This actually gives me an idea about a home that I have that’s not renting – a lease option. It also gives me other ideas as I transition from my job to real estate in a few years.

  2. Chris Bounds on

    Great advice!

    I’m big on little-to-no-money-down deals. Actually, I target that exclusively at this point in my investing plan using private & hard money lenders (then immediately refinancing when holding as a rental). It’s not that I do not have money, but I definitely do not have enough to put up large chunks of cash if I want to do multiple deals a year. Of course, I have a full time job that provides extra cash for when things do not go as plan. I’m sure I’ll adjust that strategy as my capital base increases over time.

    • Brandon Turner

      Definitely Chris, thanks. Yeah, I think being able to use little or no money keeps you agile and creative, which is key in this game. The job definitely helps too, and provides security. Thanks for the comment!

    • What about when you refinance though? Doesn’t that require cash or is it simply for closing costs, therefore, not much cash?

      • Brandon Turner

        Hey Nikki,

        It would depend. Most banks will loan (refinance) a certain percentage of the value. So if the house is worth $100,000 and they will do 70% – they will refinance your loan for up to $70,000. If your original loan is only for $60,000 and the closing costs are $5,000 – then you probably would not have to have any money, whatsoever. Now, banks are different and not all will do this, but most will. Hope that helps!

    • Chris,

      Are you saying that you use private or hard money to purchase the house with none of your own money, and then have money left over to fix the house. Once it’s done the house is worth a lot more allowing you to get a 70% loan-to-value from a bank which ends up covering 100% of the debt from the private or hard money lender.

  3. Hi Brandon,

    I agree in the logic of this article, and having a deep tool box of strategies is mandatory when you are broke. Even if you have $100K to work with, getting into a deal with little money and using other people’s money, credit and time is mandatory in REI for the long haul.

    You need to have a transaction engineer approach, so having a local mentor – coach when you have a seller’s lead that requires creativity that can answer questions helps alot.

    A transaction engineer says, “what kind of strategies works here? All cash? Buy on terms with a Wrap – AITD, CFD – Land Contract, Lease Option? If free and clear can I create a private mortgage note? Do I Need a credit partner? Can I get a Private Mortgage Lender that will fund the whole deal in a self directed IRA by using a custodian like Penco.com or TrustEtc.com?

    I think having no money available and finding partners that have money and no time is a great thing. gets you creative!!!

    Thanks Brandon, nice article!

    And, lease option assignments for no equity sellers does not require a ton of capital to get started either! :)

    Brian

    • Brandon Turner

      Hey Brian,

      I agree- no matter how much money an investor has, it’s never enough so these strategies are really important. Thanks for reading and commenting! Yeah, I’m a big fan of lease options, though I admit you are definitely the go-to source on them!

  4. Luis Acevedo on

    Brandon:
    It’s funny when I read these articles in Biggerpockets (which is a great website) I think it’s doable. Then I start looking at real estate and wonder, how am I going to pay for that, for example, let’s say I find a property out of state for $100K but I only have $10K cash. No problem, I will use hard money, but the hard money lender will only give me 65% LTV. Does this mean that I have to come up with $35K and closing cost to do the deal? What would you do? (P.S. I live in NYC and the Real Estate prices are crazy here so that’s why I want to invest out of state). Thank you in advance.

    • Brandon Turner

      Hey Luis-
      Good question! So, first, I’d only use a hard money lender on a flip or something I’m going to quickly refinance. The HML is going to fund a max of 65% of the after-repair-value. So, if the after repair value of a property is $100,000 – you just need to find one for $65,000 or even less, which is totally doable. This would work especially well if you can find one for $65,000 that needs about $10,000 worth of work. The HML would fund the deal, you’d fund the repairs, everyone wins, and then you go to the bank and get a refinance on it for $75,000 (75% loan to value), get your cash back out, and go out and do it again. So essentially, you need to find an incredible deal to make it work.

      Hope that helps! Thoughts?

  5. You are 100% correct Brandon – It is all about being creative. The longer you are in this business the more creative the idea’s come. I agree getting knowledge & finding something real estate related to get hands on in the beginning is a great way to get an income while you plan your dreams of being an investor full time. Great advice.

  6. Brandon:
    Thanks Brandon, Remrie & Michael for your response. But I think I didn’t explain my problem correctly (my fault). Regarding the $100K house example, I wanted to buy and hold the property but the problem is I would need the $35K plus closing cost to buy this property. What I’m looking for is a turnkey property where I purchase the unit and have a property manager handle the day to day. I’m not interested in flipping (too many moving parts – not ready for that yet). So my question is where can I come up with the $35K ?
    FHA, can’t I not living there. Any thoughts?

    • Brandon Turner

      Hey Luis,
      A hard money lender generally only lends for 6 months to a year anyways, so I wouldn’t even consider one if you are looking into a buy-and-hold strategy. A typical conventional loan is going to require 20% down, so on a $100,000 purchase you’ll need around $20,000. So, with $10,000 – you could consider a partnership with someone else who has $10,000 and go that route. Or, you could find a $50,000 property and make it work. Or, just keep saving and come up with another $10k.

      Those are just a few ideas! I’d also definitely post this question on the Forums for more eyes on it!

  7. Luis Acevedo on

    Brandon:
    The reason why I wanted to use a hard money lender was to close the deal very quickly, then I would refinance in 6 months and hold the property. You see I wanted to be able to pitch to the seller that I would be closing in two weeks and with a hard money lender I would be able to promise that. I can’t do that with a conventional bank loan. So it looks like I would have to go after property in the $50k range to make this work.
    Thanks Brando for all your help.

    • Brandon Turner

      Ah, I see Luis. I’m actually doing the exact same thing right now on a 4-plex (well, 5 someday) in my town. They were asking $120k, but I’m getting it for $90k. My hard money lender is going to fund the whole $90k purchase, and I’m going to put around $10,000 of my own money into the deal. Then in 6 months I’ll refinance it into a 30-year fixed. So, it can be done for sure. However, I am buying in the same town and managing myself. Plus, I have a track record for doing this kind of thing (so my HML is comfy with it) and the cashflow from the property makes it non-risky for everyone. So that’s something you can think about as well. An amazing deal usually can take the place of some of the money you’ll have to have invested in a deal.

      Anyways, hope that helps!

      • Brandon,

        Could you please share the details of how you got the asking price reduced from 120K to 90K?
        For me this is the hardest part. I see houses for sale that I would like to buy but I think that the seller would just laugh me out if I offer, say, 50K for a 100K listing. And what if they agree? Does that mean the property has some hidden damage that I have no idea about?

        Thanks

        • Brandon Turner

          Hey Nick – sure. I’m writing a more detailed blog post about it in the coming days, but briefly :

          1.) My area is not that competitive right now.
          2.) I offered $80k, and they said no. Then I said Okay and left it alone. They came back a week later and asked if I would do $100k. I said no, but I said I’d do $90k. It worked.

          It really was pretty simple. I kept my offer clean as could be (no financing contingency and a quick close) so that helped too.

          Offering too low is okay, really. Think of it this way- if it’s only worth $50k to you – it’s probably only worth $50k to most other investors as well. So if the bank parks it at $100k, no one will buy it. So, secretly – they may want to accept $50k but are too embarrassed to list it there or they are optimistic. Either way – you don’t know until you try. I like the idea that you should offer on 10 houses and only get 1 accepted. Any more than that- and you are probably offering too much. It’s important to find a real estate agent who is okay with doing that. Electronic signatures have made putting in offers SO easy, so find an agent that can do that and you are set.

          Hope that helps!

  8. Luis Acevedo on

    Brandon:
    It helps a lot, thanks. When I find a property I will post it here for everyone to analzye the deal.

  9. brandon correct me if I am wrong by law dont you have to put ernest money down even
    when doing a wholesale deal and after I and the end buyer agree on a price/terms and I assign the contract over to the end buyer is’nt that when we have it recorded the end buyer puts money into escrow
    thank you ( newbie)

    • Brandon Turner

      Hey Bob,

      I wouldn’t say it was “law” but yes, common practice is that a wholesaler will probably need to put down the earnest money when the seller accepts your offer. If this is a bank, they’ll probably want a minimum of $500 but likely $1000. If this is a private party – you could pay $10 for earnest money. However, if you find a person to “assign” the deal to quickly, you probably could avoid the earnest money altogether. But, $1000 should be attainable even to someone just starting – by hustling a pizza delivery job on the weekends if nothing else! Hope that helps!

    • Bob and Brandon,

      There is no law requiring earnest money, Furthermore, literal reading of the law stipulates the “transfer of money” or “money changing hands” is requisite to consummate a legal contract.

      Here is the kicker, the contract itself which offers to pay “money” for the property does in fact constitute money transferring hands. Most people don’t know this!

      I bought a 6-plex from a bank out of a chapter 11 bankruptcy 2 years ago. I offered earnest moneyl, and they said “we don’t need it, the contract is good enough.”

      So yes, if the seller stipulates needing earnest money with contract then obviously give it to them. But basically it is smoke in mirrors :)

  10. Hey Brandon, nice article. That is how many of us get started, it’s amazing how if your desire is strong enough, you WILL figure a way to make the de work even if you’re broke! It is good for all the new investors to know that they DO have options. You made it very easy to understand. Nicely done!

  11. Thanks Brandon for this post. These are all things I have thought of as options for ‘no-money down’ investing, however it is nice to hear that these truly are the methods. Having the will and the confidence to pursue REI despite having a ton of cash in the bank is something I believe to be soo important! Thanks again.

  12. I agree totally that some knowledge of how everythig works in real estate is aquired by working in that field. while that may require more time on your part knowing what you are doing is going to help you from making big mistakes. I do however wonder how many real estate agents offer creative ideas when it comes to there comission on a deal. I think that most people are pretty ignorant when it comes to buying property. A little reading can go a long way and save you the headaches of dealing with the strict criteria of a bank these days. great article. thanks for sharing

  13. Theo J. Davis on

    2 Scenarios:

    I recently met an investor who is in a bit of a pickle and he wants to sell his fourplex (100% occupancy) appraising for $175,000 for $115,000. Is it possible to get a hard money loan to financing 100% considering the amount is under 65% ARV and there is not fix needed only a flip?

    2. I found a incredible deal on a foreclosure in which nobody is touching due to foundation and roof problems for 45k. It was listed for sale for 235k before it was foreclosed on. If I buy this house for 45k use 45k in repairs (structural/cosmetic) would a hard money lender give 100% financing considering my requested amount is under 50% of ARV?

  14. I am broke and coming into this business with hard money lenders funding 80% of my deals. Identity theft so I can not use my credit. Where can I get the other 20%? My advantage is having the best deals from auctions and banks and owners with 100% equity home deals.

  15. Cassandra Faraci on

    As a new person in the field and to BP, this was a great way to learn some of the language used by the pros. I also have to say that this article has such a good flow. Brandon, I am impressed with your writing skills and style!

  16. Hi Brandon, I was curious about the Lease option. So when I find a home is it important to inform the owner that I will be renting out the home (lease option) or is it considered my home? Also what if I end up needing to evict do I legally have a right to do so or will I need to get the owner involved? And another thing is it a must you buy the home in the time frame?

    Thanks RA,

  17. Oh Brandon how i wish i could be your intern for a month!!! I’d learn a lot! My husband and i are interested in starting a career in this field. He has a little expenrience but im clueless. I am trying to learn as much as i possibly can so that we don’t a lotof “our money”. This article was really helpful. So thanks a bunch!!

  18. First of by saying you have a great site with good authenticity and do really enjoy reading it and it’s a good source for “practical” information. But i am looking at, and from a stand point of fresh, new and beginning investor (myself included did my first deal last March) your first advice is the most practical and that’s how I started. Worked two jobs, started a business to leverage my income to get a loan and a down payment on my first investment. And i think to be realistic most people started out this way, there is no easy money, no quick cash, no money down “scam”, they only selling dreams. No partner is going partner up, no lender is going to lend if you don’t have any credit, collateral or even a steady job/business. Not to say the other options are not viable, just saying to start out is to learn, prepare, and work toward your goal and not for a paycheck or money. I think a lot of folks are caught up into easy, quick flip and cash and forget the working hard part and buying into the dream and not acting on their dream. Cheers!

  19. Brandon, great post. I just finished a three day crash course on real estate investing and learned all of these steps. One thing I learned recently is to move quickly. I just missed out on a deal that came with a long term tenant. I would have made $430 a month on this deal after PI, taxes and insurance. I couldn’t come up with the down payment fast enough. I took too long discussing this with my wife and my partner. By the time I contacted the owner, it was 6 hours off the market. Lesson learned……

  20. Brandon this was so helpful, you give some amazing advice. I am looking to invest in buy and hold property Out if state. I have about 15k to invest and looking to invest in indianapolis. In your opinion with the capital i have would be
    Idea area to invest in?

  21. I AM RUNNING INTO A PROBLEM ,I HAVE NO IDEA WHAT TO DO OR HOW TO DO IT. WHAT AM I LOOKING AT.AND WHAT AM I SOPPOSE TO DO WITH IT I HAVE NEVER MESS WITH REAL ESTATE. BEFORE SO I AM LOST I NEED HELP,,,,,

  22. Guy, you said it..Myself, I’d take private lenders over hard money lenders b/c w/ private lenders you can negotiate and they won’t charge points. They just want to see a return on their investment I have no desire to foot the rehab expenses, I’ll let the lender include that in their initial upfront investment amount..Now THAT is a true no money down deal!

  23. Brandon,

    Thank you for your time in sharing these basic strategies with we who are beginning our real estate investing journeys. The simplicity with which you present the information is much appreciated. What about seller financing either full or partial? If I secured a Hard Money loan for say 70% LTV and the seller financed the remaing amount would I be looking at any costs in addition to the closing/rehab costs?

    Thanks for this great site.

    Greg Mills

  24. Great article. I’m new to the site. Will a broker suggest hard money lender? What a great idea. Thank you. I’m a 27 year old who’s very interested in real estate. Will hard money lender idea work with multi family properties?

  25. Brandon, great post and great community you have fostered here at BP. I wanted to add that when doing no money down deals creativity and combining multiple options can really be the missing piece many are looking for.

    I wanted to add seller financing with transactional funding via selling the new note to an investor looking for better returns (ours are 10% | 10yr Fixed | no balloon | no prepayment penalty) as another option.

    Scenario:

    – I made offer on a 4 plex. Completely rented out i.e. Cash flow would cover the new note payments and then some.
    – I then sold the property on seller financing
    1st at 90% LTV ( investors like 90% or less LTV and higher rates of return i.e. 10% fixed <— HINT )
    2nd at 10% LTV ( I hold this one for a 3rd pay day later )

    -I then sold the new 1st seller financed NOTE and set the closing for the same day as the close on the offer I made with the original seller on the 4 plex.
    * I included the 1st two payments ($4000) with the new note which I required our new investor buyer to bring in to closing as the down payment from my investor buyer. He loves it , he gets a property for $4000 down. Our Note Buyer loves it because now the note is " seasoned" 60 days right at the closing and arrives with the 1st two payments already made day 1 at the closing.

    – NOTE BUYER sent money to title ( because he wanted to earn that 10% every month vs. 6% in his 401K or the stock market on maybe ) to purchase the new seller financed private mortgage note I created with my buyer. ( ALL BEFORE I EVEN CLOSED OR OWNED THE PROPERTY)

    – My investor buyer got a new 4 plex completely rented out, making $800 a month more than the new note payments on the seller financed mortgage note.

    – the money from the note buyer was enough to then close out the original purchase on the contract offer I had with the seller.

    – I minimal no closing costs because I assigned my contract to buy to my investor, and used a note buyers money to fund the deal. Title company drew up the notes for me.

    Yes notes.. remember we gave the guy seller financing on a 1st mortgage at 90% and 2nd private mortgage for 10% LTV.

    We sold the 1st 5 years of the 10 year FIXED private seller financing mortgage payments and made a $23,000 profit. (1st PAYDAY)

    We still have the last 5 years of payments left & we can hold and collect those payments or sell it. ( 2nd PAYDAY)

    Remember we still have that 2nd mortgage. We can sell it, collect the monthly interest payments on it, get paid off completely if he ever sells / refinances or worst case get the house back in the unlikely event he just defaults by foreclosing. – I live in a trust deed state so if you have to foreclose it can take a while for full disclosure and transparency on this creative route.

    I eventually sold the last 5 years of payments and 2nd note to another note buyer. It is all profit at that point. NO MONEY ( at least not mine ) in the deal. Simultaneous NOTE purchase/property closings do require multiple moving parts but are no more complex than finding your buyer(s) quickly or 1st that will take your great deal when you find it and put it together.

    That is the magic of will power +creativity, and CAN result in a no money down 3 TIME PAYDAY!

  26. I sort of figured this trick out on my own, haven’t played it but this should work if your dealing with another Investor (wholesaler). After looking at a lot of Private Lenders as well as Hard Money Lenders I saw this. Lot of them will loan at 70% LTV (ARV). To me that means if a house is worth lets say $100,000.00 at fair market value but its a fixer upper so its going to be less (sometimes way less if the original owner sold fast), so lets assume Wholesaler got it real cheap and will sell it at wholesale price, ok for the sake of arguement lets say he wants to sell it at $55,000.00. Now the Private Lender is going to Loan you the money on the Appraised ARV at 70% which will be $70,000.00 which gives you $15,000 left over. Now depending where you’re at the closing price may be different depending on the area, but lets assume (and this is not actual numbers but a guessimate) that your closing costs will be close to $5,000 so lets round it up to $5,000 and that’s if you don’t split the closing costs and points if there are any. After the deal is complete you walk away from the table with about $10,000 which you can use to make the repairs in order to flip the property, sell the house for the fair market value and again make a profit. And its a no money out of your pocket type deal. I did something like that years ago but a bit different. Back then we had No Doc Loans and Hard Money Lenders were something you stayed away from. The No Doc Loans were actually Mortgages and we actually had to get a lot creative with the loan. The loan was for 75% LTV on the Property (no after repair value) but the appraiser actually will give the Actualy Fair Market Value of the property, now I was buying the house wholesale but on paper it was showing I was buying it for the Fair Market Value, even though the Loan was for 75% LTV I actually paid nothing, the trick was that the Investor (Wholesaler) showed on paper only that he was willing to carry back a 2nd Mortgage of the balance of the loan which was 25%. I actually paid the 2nd Mortgage for a $1.00 and I walked away from the closing table, depending on the price of the house, with any where from $4,000 to $10,000 which I used to fix the houses.

  27. Sorry about this I needed to add this, from what I understand of Private Lenders and Hard Money Lenders, even though you are getting a loan, they are Loaning you the Money on the property not on you which means no credit checks. If you go that route you better make sure you do your homework and get some realistic comps to show the Lenders, they want to make sure they’re going to get their money plus the interest, that is why they’re in the business that they are in. That and they are going to have an appraiser check out the house, to make sure that they house is valued correctly. If you don’t have the comps as well as other paperwork involved in the transaction you can kiss the loan bye bye, until you can come up with the needed paperwork.

  28. Hi Brandon,

    I just signed up with “Bigger Pockets” last night and I can’t stop reading. This site is amazing!!! I am so jazzed about real estate investing. I flipped a house back in 2009 and knew this is what I wanted to do the rest of my life. Not just flip but buy and hold too. I know that true long term wealth in real estate is made through passive income generated by acquiring rental properties. My goal is to start out flipping and wholesaling and move into buy and hold apartment buildings and commercial properties. I know that it will happen and I am so excited to get the ball rolling. I started a real estate investment company this month with a business partner and we looked at our first property last night. I was a no go but its just the first one.

    Thanks again for all you do for real estate investors from all walks of life with many different dreams and aspirations.

    Sincerely,

    Bruce

  29. Hi Brandon. Great post. I was wondering what you would do in my situation. I have been marketing for wholesale deals for about 5 months. I’ve done only one deal that was not very lucrative. Wholesaling has such a huge learning curve and I was doing it to get the downpayment for a buy and hold. I’d like to also do a fix and flip but I wouldn’t know where to start with that. Anyways I’ve started thinking that if I had taken an easier route I might really be making some money right now instead of still being broke writing letters and making lower offers. Is there a way i can get a buy and hold or do a fix and flip in my situation as a beginner? I don’t really have any reserves if a leaky toilet broke either

  30. I am 21 years old and have just got my real estate license here in PA. I am lookin forward to learning EVERYTHING I can about real estate and REI. This post was very informative and has me very optimistic for the future.

    Thank you for your time & insight,
    – David Cook

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