No money down dumb question..

[Andrew Hansinger]

Okay, I've been on the site for a few weeks, so please pardon my ignorance, but I feel like I'm missing a crucial piece of information that is likely so obvious its not really brought up when people talk about no money down.

I don't understand how one can profit with no money down in a flip, or buy and hold deal. If a lender is covering 80% and OPM is putting down the other 20%... how are you entitled to any return? How can you claim equity/cash flow?  Is this something you negotiate with the private investor supplying the OPM?  If you could point me to a blogpost that explains this, that would be helpful.

Thanks!

[Account Closed]

Basic profit scenario.  Buy for $100K.  Lender funds $80K, private investor lender funds $20K.  If you can rent it for enough to cover both loans and expenses, any profit is yours.  If you can sell it for more than $100K plus expenses, any profit is yours.  The lenders don't own the property or the equity in it, you do.  If Wells or BofA funds 100% of my purchase, they are not entitled to anything other than monthly payments or a full payoff when I resell. They are lenders, not partners.