APO, AP · Member since 2016 · 168 posts · 54 votes
So I have been studying more and more into creative financing and different ways to purchase properties with a low amount of cash needed. I have also noticed that a lot of people want to get into real estate with a very low amount of cash for the entire process. As I have been looking more and more into it, I have come to find out that going into purchasing a property will require some sort of your own cash at some point including attorneys, appraisals, inspections, etc.
Has anyone actually been able to have these costs covered or not needed or am I right about actually needing cash for this?
I bought a duplex in May and paid $0 at closing due to value being higher than the sale price. All closing costs were rolled into the loan. Only thing I paid out of pocket was the $600 inspection.
I bought a duplex in May and paid $0 at closing due to value being higher than the sale price. All closing costs were rolled into the loan. Only thing I paid out of pocket was the $600 inspection.
I used a short term (2 year) loan through a small, local bank I have been building a relationship with. I am in the process of refinancing into a 30 year fixed now. It's more expensive to do this way due to the extra closing costs, but I haven't found a fannie mae lender that is as easy to deal with as this local bank. They make closing deals quickly very easy.
New investor and investors who wants to leverage as much as possible. The "no money down", is really not an accurate statement. Investors are looking for none of their money down. Lenders do not like to make deals with people who have not skin in the game and try to limit their exposure. When the economy was weaker individual property owners were more inclined to do these types of deals. They do exist, but it is rare for someone to have a portfolio of them.
I have bought many properties with no money down. For example, I just bought 11 vacant new house building lots. I borrowed the entire amount from an acquaintance. No money down. I pay him back within a year. I also bought houses from individuals with no money down. Just start making payments to them.
So I have been studying more and more into creative financing and different ways to purchase properties with a low amount of cash needed. I have also noticed that a lot of people want to get into real estate with a very low amount of cash for the entire process. As I have been looking more and more into it, I have come to find out that going into purchasing a property will require some sort of your own cash at some point including attorneys, appraisals, inspections, etc.
Has anyone actually been able to have these costs covered or not needed or am I right about actually needing cash for this?
I notice from your address that you're probably military.
With a VA loan, yes. I personally have done it as the borrower & have originated many such loans. Took a higher rate for a lender credit, and had a seller credit. Then I did an IRRRL a little down the road to optimize the interest rate. $8k lender credit minus paying $120 more for six months minus refi closing costs = came out ahead a couple grand, relative to taking the par rate.
With a VA loan, and only with a VA loan, you can actually 'make money' from buying a house. Basically, if there's extra money on the table (if seller credits + lender credits in exchange for a higher rate > closing costs), and you don't want to use it to buy the rate down, you can tag a debt on your credit report to be paid down or off. Consumer debts gotta be paid back/off eventually anyways, so even though it's not money in your pocket today, you still made money.
You can get no money down investments in a ton of different ways! Seller financing is how I funded most of my properties. Some of them I did not put down 1 dime. You can really scale this way as well.
Hi david. I’m looking to get started in a similar fashion. My main question is how did you go about refinancing from original seller to a more traditional lender for more favourable loan terms? Ideally I would make that transition ASAP so my deal would cash flow.
I personally was able to get extremely good terms with the seller I dealt with. My interest is 5.5% which is above the bank mortgage i have by .5%. I plan on converting the 14 person parking lot that came with the properties to not be included in the rent and have it paid by month at 50 dollars when the leases are up. This will raise the yearly income by 8,400 dollars and when we refinance they will be using the income approach which will get me to 84k in equity out of the 110k needed. But we also had our place appraise for 75k more than the purchase price so we will be able to pay off the seller when we refinance.
I only do these deals if the margins are high. The cap rate on those properties is 12% and is cash-flowing 1800 dollars a month after all expenses including the second mortgage. Yes this is a great deal, but great deals are the only way you can successfully pull off seller finance situations. If you need to pay off the seller quickly in order to cash flow the margins are not big enough unless you are a contractor who can quickly renovate and pull equity out.
Yes it's possible, done over 50 times. leave closing table with a check for rehab most of the time. portfolio lenders local regional banks. I pay a premium interest rate in house loans , 3 to 5 year lock on a 15 to 20 yr amortization. Interest rates are starting to drop some. I have worked with as many as 5 different banks, down to two mostly now. All returns are reinvested. I have never take money out so far. I have a job that meets my needs, (health Insurance) and life expenses.
Oh it is very possible. Either become a RE agent or partner with one. Find a property that's on the market but underpriced and that's a value add play. Get a hard money loan/conventional, credit your agent commission to your closing costs and first month (some cases two months) of carrying costs. Within that timeframe either renovate and flip or rent and refi into a conventional mortgage if you go the hard money route.
I bought a house in 2015 with cash. This past April I took out a $60k loan on that house to buy and rehab another house. $0 out of pocket for the refi, literally $0. Paid $40k for the new property, rehabbed myself cost $15k. Even had some $ left over.
It certainly IS POSSIBLE - I've done it many times. Some lenders will cover all of the costs for you, or if you get a partner in on the deal he/she could cover all of the costs. The best use of your time as an investor is going to be finding deals and finding money. Network with all of the lenders that you can; in fact, network with everyone that you know! You'll come across more and more possibilities (One of them being buying deals with no money down).
Same here . Deal with a local community bank . I cross pledge existing properties and walk away from closing with check for rehab costs . Don’t have to use any of my money .
No money down is a little difficult to achieve. Honestly, the only way i see this could work is if you find a partner who is willing to front all of the cost in exchange for equity and being a passive investor.
Other than that, just like you said you will have to have some money to invest with at some point.
I bought a 4 unit building using my VA loan entitlement for no money down. As a matter of fact I got a check for about $2400 at closing. The condition is I have to live in the property, which I do and i'm personally fine with that.
It was a little rough at first. The building needed a ton of work, luckily i’m able to do a lot of it myself so that saves a tremendous amount in labor costs. All the units were renting at less than market rent, and filled with tenants that paid on their own timeframe if at all.
At first i was collecting enough rent to cover the mortgage and utilities, and live in one of the units free and clear. I was collecting about $2100 in rent a month with a mortgage of $1200 and utilities at about 600 a month. Living without having to pay any sort of money from my W2 jobs and doing a lot of the improvements and repairs to the property myself allowed me to do pretty decent.
I bought the property almost exactly 2 years ago. Since then I have removed the tenants from 3/4ths of the units. I have remodeled 2 of the units, live in one of them, and raised the rent on the only remaining original tenants. I now collect $3500 a month in rent and have reduced the utilities from $600 to $500 a month on average. My purchase price was $170,000 and with the improvements i’ve made and the increase in market prices the building is worth in the $225,000 range, sweat equity paid off huge! I still live in one of the apartments and now cash flow over $1000 a month. I realize this may be a statistical outlier of a situation, but hopefully these kind of deals are more common than I imagine.
I look forward to learning more and building my portfolio. My goal is to live a modest lifestyle off rental income and retire from my W2 job in 5 years.
So I have been studying more and more into creative financing and different ways to purchase properties with a low amount of cash needed. I have also noticed that a lot of people want to get into real estate with a very low amount of cash for the entire process. As I have been looking more and more into it, I have come to find out that going into purchasing a property will require some sort of your own cash at some point including attorneys, appraisals, inspections, etc.
Has anyone actually been able to have these costs covered or not needed or am I right about actually needing cash for this?
Hey Man, I love this topic!
I actually just posted a post here on BP about how my parents and me did our first deal with absolutely $0 of our own money (as of today) I laid out our full process etc, so it's a bit lengthy lol.
I know this post is a bit old now, but when I searched "no money down" it was the first to pop-up. My partner and I are looking to do a BRRRR deal on a duplex. We wanted to start as soon as possible to be able to accomplish our goals. We feel it is best to go with an off market deal that we can get under value either through a wholesaler or from mailers. Our private lender has already established that he will work with us to fund our deals, but we need to bring 20% down for the purchase price of the home and still keep him in first position. The typical price range for off-market multifamily deals in the areas we want to invest in are usually right around 150k or less (sometimes more). Does anyone have suggestions for how we can get the rest of our 20% down payment AND closing costs for the deal sooner? We have some of the money already from working OT at our W-2s, but if we continue to rely on just that to help build our down payment and closing costs, it could be years before we purchase, which is what we are trying to avoid.