Real Estate Investing Basics

A Low Money Down Deal Opportunity

Expertise:
34 Articles Written
low money down real estate investing

Last week I wrote about the basics of buy and hold. In response to my post there were some questions from a reader named Ray. Ray wants to get into real estate but he's stuck on how he will get the money for the down payments and finance each of his deals.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

I’m pretty sure most real estate investors have faced this challenge at some point. I know even Donald Trump has faced plenty of challenges when it comes to financing and funding his deals. It’s an obstacle you have to overcome to get deals done!

The good news is that there are plenty of ways to do deals as a real estate investor – even buy and hold deals – that do not require you to invest your own money or qualify for financing. One of the greatest opportunities for this is to find burnt out landlords or real estate investors that just don’t want to deal with the hassles of managing their properties anymore.

One deal we did recently was with a retired couple that wants to spend most of the winter traveling in warmer climates. My husband Dave had met them at a real estate investors club meeting. A few weeks later the fellow contacted Dave and asked to meet. At that meeting he started telling Dave about the properties they owned and about how they had this one that they were trying to sell because they didn’t want to deal with tenants in this property.

Turns out the property was actually so nice that they couldn’t bring themselves to put renters in there for fear the tenants would ruin it. But, the market has slowed this summer, and they weren’t able to sell it without losing money.

As the conversation went on Dave offered a simple solution to their problem. We’d become joint venture partners with them on the property as though we had just purchased the place today (at it’s market value not at the higher price they were trying to sell it for).

Basically with an appraisal and a joint venture agreement we had a deal. They leave their existing financing in place and we become 50%/50% partners on the property going forward.

We put the property into our rent to own program. We spent less than $400 to appraise the property and market it to potential tenant buyers and now we're now making about $200 per month for us and $200 per month for our partners and we pocketed $3,500 as our half of the deposit fee. Maybe that isn't big money but when we sell the property at the end of the lease term we'll make another $10,000 or so from the sale of the property.

In total we should make a little over $15,000 from this deal if it goes as planned and all it cost us was some time and $400.

So to Ray and other new real estate investors thinking that you can’t invest in real estate because you don’t have any money or you aren’t able to qualify for financing I challenge you to start looking for other ways to solve the problems you face. Start attending your local real estate investing club meetings (that's where we met this particular investor) or calling for rent signs in the area. I can almost guarantee you won't have to look too hard to find a burnt out landlord or fellow real estate investor that would love to share the burden of their rental property with someone that has some time and energy to tackle the challenge! And if you do – you probably won't have to worry about financing or funding the deal.

    Taylor White, PHD
    Replied almost 10 years ago
    I would agree that now is also a good time to be looking for VERY motivated sellers…especially the ones who hate managing property, and have renters in place.
    Rachel aka Mobile Home Gurl
    Replied almost 10 years ago
    It’s great you were able to help these folks out with their problems, Julie! This business is definitely about solving problems and creating win/win situations. Very interesting about doing JV deals, I’m hearing it done more and more these days – thanks for sharing! Reply Report comment
    Rachel aka Mobile Home Gurl
    Replied almost 10 years ago
    It’s great you were able to help these folks out with their problems, Julie! This business is definitely about solving problems and creating win/win situations. Very interesting about doing JV deals, I’m hearing it done more and more these days – thanks for sharing!
    Julie Broad
    Replied almost 10 years ago
    Thanks Rachel!! With your line of business you don’t really need JV partners but it is a good way for us to come up with down payments and get financing!! Thanks for your comment Taylor!
    Julie Broad
    Replied almost 10 years ago
    Thanks Rachel!! With your line of business you don’t really need JV partners but it is a good way for us to come up with down payments and get financing!! Thanks for your comment Taylor! Reply Report comment
    Anthony Rueda
    Replied almost 10 years ago
    Your article is very interesting. I’m always looking for new ways to generate business. In my area, there’s a large supply of people wanting to rent-to-own, and your article has given me ideas on where I can find the sellers/investors for these types of deals.
    Julie Broad
    Replied almost 10 years ago
    Thanks so much Anthony!! I get so many great ideas from other folks here on Bigger Pockets. I am happy that I could share one of my own.
    Carson H
    Replied almost 10 years ago
    Well played, Julie! That’s a nice creative financing solution. Glad to see my fellow Canadian tearing it up. Keep posting your blogs!
    Julie Broad
    Replied almost 10 years ago
    Thanks so much Carson! What part of Canada do you call home??
    Carson H
    Replied almost 10 years ago
    Central Alberta for now 🙂
    Julie Broad
    Replied almost 10 years ago
    Awesome!! I am and always will be a prairie girl. I was born and raised in Alberta and actually did my first degree at Mount Royal College/UofC but once I discovered the milder climate of BC and the fact that my hair isn’t full of static electricity 7 months of the year I haven’t even considered moving back. Thanks for stopping by the post and saying hello.
    Tim
    Replied almost 10 years ago
    Very interesting way of getting a JV partner. This gives me some ideas. Thanks Julie!
    Julie Broad
    Replied almost 10 years ago
    It’s amazing how many opportunities have come out of us just being present and friendly at our local real estate investing club meetings. There are a lot of folks that want to be real estate investors but don’t have the time, energy or expertise to make it work for them. It’s a big opportunity for those of us that do have those things to help them and make a little money in the process. Thanks for your comment!
    Ryan Moeller
    Replied almost 10 years ago
    Great article. Solving problems is the best way to get a deal and you where very creative. Rent to own or Lease Options are an amazing strategy with many creative ways to profit. Lease option assignments, sandwich lease options, partnering like you did or even earning a fee for connecting the buyer and seller. Well done Julie!
    Ryan Moeller
    Replied almost 10 years ago
    Great article. Solving problems is the best way to get a deal and you where very creative. Rent to own or Lease Options are an amazing strategy with many creative ways to profit. Lease option assignments, sandwich lease options, partnering like you did or even earning a fee for connecting the buyer and seller. Well done Julie! Reply Report comment
    Shawn Bates
    Replied over 8 years ago
    Great article! I just stumbled apon this website today whle holdig an open house. I will be using biggerpockets.com for now on.
    Joshua Dorkin
    Replied over 8 years ago
    Glad to hear it, Shawn! Make sure to jump on our social network at http://www.BiggerPockets.com and network with our other 77,000+ members.