Is Real Estate investing without money real?
Real Estate Broker · Toa Baja, PR · Member since 2013 · 30 posts · 7 votes
Hi,
I've heard tapes, seminars and blah, blah, blah, about this particular subject but I've never really seen step by step with actually company names and contact information.
Without any money it is possible.
A little money is helpful.
I bought 3 houses for cash in 2002-3. They cost me a total of $22,500(3,000+13,500+6,000)
I fixed them up using whatever I could scrape together, zero interest credit cards, cheap family help. I got them rented.
I then got 3 HELOCs and bought 4 more, and so on, and lines of credit, and term notes and....
I am up to 60+ rentals, Many flips, and as far as I am concerned the only thing I have invested is $22,500. About 1/2 of my rentals are actually mortgage free.On paper my rental property is worth over $2,000,000.
And it is all paid for, or being paid for by my tenants. They pay my loan payments, my repairs, my property taxes, my insurance, my overhead.
What other investment can you buy with other peoples money and never actually have to pay back. The renters pay it back.
Of course, like I have said in other posts, I have no cash. I am fully invested in rentals.
What an amazing country we live in.
PS I have never been to any paid seminars or paid for courses. I did buy one book
Buy it, fix it Sell it, By Kevin Myers. I also read a loaned copy of Rich Dad Poor Dad.
Yes it is. There are various tapes and seminars out there. I don't have any names or step by step instructions with me right now though.
Without any money it is possible.
A little money is helpful.
I bought 3 houses for cash in 2002-3. They cost me a total of $22,500(3,000+13,500+6,000)
I fixed them up using whatever I could scrape together, zero interest credit cards, cheap family help. I got them rented.
I then got 3 HELOCs and bought 4 more, and so on, and lines of credit, and term notes and....
I am up to 60+ rentals, Many flips, and as far as I am concerned the only thing I have invested is $22,500. About 1/2 of my rentals are actually mortgage free.On paper my rental property is worth over $2,000,000.
And it is all paid for, or being paid for by my tenants. They pay my loan payments, my repairs, my property taxes, my insurance, my overhead.
What other investment can you buy with other peoples money and never actually have to pay back. The renters pay it back.
Of course, like I have said in other posts, I have no cash. I am fully invested in rentals.
What an amazing country we live in.
PS I have never been to any paid seminars or paid for courses. I did buy one book
Buy it, fix it Sell it, By Kevin Myers. I also read a loaned copy of Rich Dad Poor Dad.
Yes. I bought a 4 plex once with no money out of my pocket and last year we bought an apartment building with no money out of my pocket.
4 plex was an investor partner. I got equity for finding the deal and managing the property. Eventually sold my equity back to my partner to cash out.
Apartment building I used another property as collateral for a second on the apartment which was used as the down payment. In a couple years that second will be paid off (buy my tenants) and I'll have $80k in equity that cost me nothing but my time to get.
It isn't a statement of there being no money involved. If you were selling a property, you wouldn't give it away now, would you. If the answer is yes, I'll make you an offer on your next one...dbl your AP. LOL
The real statement is "None of your own money" down, or "none of your own money down for very long".
The answer is a very big "yes"...and there are many ways to do it.
I appreciate all your answers. Interested only to invest in Atlanta, GA I've never seen or heard about these deals here. Am I looking at the wrong place? where is the source of information for such properties available with zero down payment deal and private lenders?
Thanks,
I bought the first 11 properties essentially 100% financed, because I did not have any money. check out my BP Podcast #82
David I listened to your BP podcast and you had so many different ways to do this which means that it'll be different scenarios every time there's a deal. In my case I live in a rental complex, don't know who my neighbors are, don't have friends here in GA so I guess I'm stock. I moved to GA 4 years ago and still don't know how the system works. I come from Puerto Rico where I know too many people and understand the market and I can buy a house there with a mask over my eyes but here I'm lost. Don't even know where to start.
One of the first places that I would look is at the local REIA groups, I know that there are several in the Atlanta area. Join multiple REIA groups, I belong to 5 and regularly attend all 5 meetings. Its a great opportunity to meet like minded real estate investors, people who have property to sell, people who have money to lend etc. One of the REIA groups that I am on the Board of Directors has an attorney on retainer who comes to every meeting and answers any questions of the members for FREE at the meeting. He does charge for consultations on the phone or at his office. He has a practice focused on real estate investing and buy and hold.
There are several real estate educators based out of Atlanta including Andy Heller and Dyches Boddiford . I was at Dyches' Advanced class last January in Atlanta, besides the great content, John Hyre and Jeff Watson were there, and there was an opportunity to meet with other experienced investors for a whole weekend.
@Daniel Vazquez - I don't mean this to be offensive but good real estate deals don't just grow on trees and aren't just advertised out there by some company. There are opportunities to buy real estate with 0 of your own money in the deal, but it takes a lot of work, the right deal, the right investors, the right situation for the seller, etc. If you can convince friends/family/investors to loan you money at a certain percentage rate, you could leverage that money to buy real estate, pay them back first, and then keep the rest of the profits for yourself. Again, the numbers have to work on the deal.
Long story short, the best deals you hear about on here someone was in the right place at the right time, talked to the right seller at the exact time they decided to take action. You can't just go to a website to find 0 money down deals.
You used to be able to buy real estate with 0 down much easier......in the mid-2000s. They called those 80/20 loans, one bank loans you 80% for 1st lien position and another loans you 20% for 2nd lien position at a higher rate. These loans were the reason we hit the real estate bubble we did, property values did not just keep going up and up and a lot of those houses are now hitting the county foreclosures every day. Ask anyone who bought a property during that time (like me), most of them are upside down and/or had to short sale/give the property back to the bank.
It sounds like you need to network more and get creative on where you can get access to capital. For what it is worth, here is a deal that I close on next week. I will not have any of my own money invested in it.
3 bed, 1.5 bath, 2 car garage. Wholesaler emailed me and many others advertising it at $75,000. I ignored it at first since I thought I had another deal, but eventually went to see it and got it under contract at $68,000.
ARV is conservative at $100,000 and after closing costs and rehab, I will have $80,000 invested in it.
I borrowed $80,000 in advance from an investor at 5%, interest only, paid quarterly. Yes, this is a very soft, hard money lender that I know personally. Until you have been in this game long enough to establish a positive reputation, I have no expectation you will get anywhere near as favorable terms. But you should still be able to get access to other peoples money.
Point being, I borrowed $80,000 in advance in order to fund the purchase and closing costs and then cover the rehab. I get this thing cash flowing in 45 days and do a cash out refi with 30 year fixed rate somewhere around 4.5% at 75% ltv after it seasons at least 6 months.
Rent should be $1000/month....maybe $950. Point being, this is a simple example of borrowing from someone else.....GO FORM RELATIONSHIPS NOW....and then converting to permanent financing. I end up with a cash flowing property with around $20,000 equity and just over 8% cap rate. Is this an amazing home run of a deal? No...of course not. But considering I have $0.00 invested in this deal, it's pretty good to me....for what I can find in Tulsa right now.
Just did a deal, where I sold a house to a rehabber. He got private financing for not only 100% of his purchase price, but also 100% of the closing costs, 1005 of the rehab costs and 100% of the deposit.
He is into this property for absolutely ZERO money. It can be done and it can be done NOW!
It is possible, but at least in our market (Tulsa) it is becoming more difficult:
Step 1: Purchase the property at a deep enough discount so that total cost, including rehab and transactional costs, is below 75% of After Repair Value (ARV).
Step 2: Get a hard money loan for purchase price + repair costs. The loan terms won't be cheap. You may have to pay points up front and the interest rate might surprise you.
Step 3: Complete the rehab as efficiently as possible so you aren't paying the exorbitant interest on the hard money loan for an extended period of time.
Step 4: Apply for a 75% LTV conventional refinance mortgage with the mortgage broker/banker of your choice.
Step 5: Make sure you speak with the appraiser before he/she visits the property. Tell them about all the work you have done on the property and any favorable aspects that would increase the property's valuation. If you have any favorable comparable sales (with MLS numbers), give them that information, too. The appraisal is important because the lender is only going to give you 75% of the appraised value.
In Tulsa, these deals are typically only found on properties requiring extensive rehab. Cosmetic rehabs are being priced up by investor/homeowner demand so it is nearly impossible to end up all-in below 75% LTV.
Hi,
I've heard tapes, seminars and blah, blah, blah, about this particular subject but I've never really seen step by step with actually company names and contact information.
This is probably going to sound a bit bazaar but it happened...
I connected with a seller who want to get rid of her house badly. I had no money and my credit was laughable. The only thing I had was the knowledge I gained from this website, Carlton Sheets, Lonnie Scruggs, etc. and I planned my approach and went for it. My areas of "expertise" were wrap mortgages and sandwich leases.
I offered to rent-to-own her house with the intent to get other renters in her house under a sandwich lease-option. I can't remember the numbers exactly but let's say that:
My contract with the owner:
Earnest Money: $1,200 (to be paid with 120 days)
Monthly Rent: $1,100
Rent Credit: $200
Term Length: 3 years
My contract with the tenants (3 times):
Earnest Money: $3,000 (paid owner $1,200 leaving me with $1,800)
Monthly Rent: $1,450
Rent Credit: $150
Term Length: 1 year
I rented this place out three times. Two tenants were evicted but I kept the earnest money paid ($3000 a pop). The last tenants paid on time, but could not qualify for a mortgage at the end (that turned into a war because they wanted their earnest back, by the way... they lost that war).
With all that said, you could earn some quick capital setting up a FOR REAL no money deal (that rhymed). Then you could take your earnings and roll them into purchasing your next deal.
I really thank all of you for the positive comments, in no way whatsoever I feel offended since after all I'm here to learn right? Do hope to get at least one deal though.
I just learned a ton in this thread, bookmarking it now!
Yes, you may be able to do "deals" and make $ off those deals, without using your own money. That's not really investing, per se (i.e., it is not the actual buying and selling of an asset). But it's possible.
What DOES take money is MARKETING. Sure, you can post on Craigslist and put out some handwritten bandit signs and maybe write some letters. But if you want this to be a sustainable "business", it requires a consistent flow of DEALS and deals require a consistent flow of LEADS. And - ultimately - leads cost money. But without them, you're not in the business at all.
So I encourage you, if you can score an early deal, roll (at least) half your profits into a MARKETING BUDGET so you can turn that $10,000 profit into a business that could ultimately make you $1,000,000.
“Today I will do what others won’t, so tomorrow I can accomplish what others can’t.” ~ Jerry Rice
My goodness, this thread is amazing! Great info and perspective on both sides of the house. Thanks to all of you for the responses.
David,
I really appreciate your words. I've not been as positive as I should and that of course reflects on my performance. Due to I moved to Atlanta from Puerto Rico it has been hard to adjust but I'm pretty sure I can do this. Will post later when I make my first deal!
Yes, you may be able to do "deals" and make $ off those deals, without using your own money. That's not really investing, per se (i.e., it is not the actual buying and selling of an asset). But it's possible.
What DOES take money is MARKETING. Sure, you can post on Craigslist and put out some handwritten bandit signs and maybe write some letters. But if you want this to be a sustainable "business", it requires a consistent flow of DEALS and deals require a consistent flow of LEADS. And - ultimately - leads cost money. But without them, you're not in the business at all.
So I encourage you, if you can score an early deal, roll (at least) half your profits into a MARKETING BUDGET so you can turn that $10,000 profit into a business that could ultimately make you $1,000,000.
“Today I will do what others won’t, so tomorrow I can accomplish what others can’t.” ~ Jerry Rice
I love Dev Horns posts.
Look this is a friggin' business.
Can you get a Jiffy Lube without money?
"Bootstrapping" will gert you so far. Be passionate, get a money partner, network.
Old School - Here are 33 ways to find motivated sellers, some are expensive, some are not.
1. Place a newspaper ad (major daily)
2. Place an ad in Pennysaver, Thrifty Nickel, Greensheet, etc.
3. Bandit signs
4. Drive neighborhoods looking for vacant houses and FSBO's
5. Call FSBO ads
6. Search MLS for junker properties
7. Search MLS for expired listings
8. Contact landlords who are evicting a tenant
9. Contact landlords with properties for rent
10. Pre-foreclosures
11. Foreclosure auctions
12. REO's
13. HUD & VA houses
14. Tax sales
15. Estate sales
16. Properties with outstanding building code violations
17. Properties with outstanding health code violations
18. Condemned properties
19. Fire damaged properties
20. Out of area owners
21. Network with professionals, i.e. attorney, CPA, REALTOR®.
22. Network with service people, i.e. letter carrier, pool service person, lawn service person, newspaper delivery person, carpet cleaning people, plumbers, etc.
23. Bird Dogs
24. Wholesalers
25. Magnetic car sign
26. Distribute business cards EVERYWHERE
27. Career attire (Polo shirt with embroidered "I Buy Houses" logo)
28. Fliers
29. Door hangers
30. billboards
31. radio spots
32. TV spots
33. full-page ads in the yellow pages.
Hope this helps. Best of Success!!
YUP! Here is one of my most recent deals:
Purchase Price: $32K at Trustee Sale
Rehab: $8K
Sales Price: $76K with an owner financed wrap around note
Cash in Pocket: $9500 after all the dust settles and monthly profits of $135 for the next 20 years. So at the end of the day I have none of my own money in the deal.
This was a mobile on land which was purchased on the courthouse steps for cash and rehabbed. I offered owner financing with 15% down on a wrap around note. I have a private lender that cashed me out and prefers that I wrap his notes. Here is a before and after pic of property.
Only deal with really motivated sellers. I mean really motivated, not just a seller that wants out, one who must dump his property. Try sitting in rent court a few hours a day, listen to the cases, meet landlords in the hall outside the court after his case. Ask, if they know anyone with rentals they want to sell?
Also go to housing court, this is a court where landlords and owners who have not abated their housing violation. Unless it is abated in a timely fashion, it becomes a criminal offense.
Make offers on expired listings thru the agent, ur offer should be 20-30% below the expired price. Never look at the property until the offer is countered or accepted. Make several offers every day subject inspection.
Get a list of housing code violations, find the owner and ask if they know anyone who wants to sell their property. Give them a list of contractors or handymen who can help them, offer to fix the problem
Find owners in tax sale, do it as a public and private service. Let them know their options. When you give to others ideas that can help them, the laws of reciprocity will benefit you sooner or later. Be good to others at all times and that kindness with come back to you.
Charles
@Daniel Vazquez@Jake Stenziano
Doing deals without money is possible if you have experience and credibility. I had my doubts a few years ago. My partner and I just completed in August a 281 unit deal for 11 million dollars with 20% owner financing and rest financed by the banks, two of them. We had to deposit 180,000 in escrow in one bank, but they will be releasing 1/3 of amount for the next 3 years.
The ONLY reasons this was possible was that we had terrific relationships with the banks, we already owned a well run portfolio of over 200 units, and the deal was purchased from a motivated seller who just wanted to retire and know that he was not going to take this property back. The banks appraised the deal for 11.7 million at closing.
I only write this to dispel any notions that no money down can not be accomplished. Investors do it every day by using other people's money. It would be risky if an investor has limited experience, and I would not recommend on the very first few deals, but like anything else in life, with practice comes proficiency.
The funny thing about this deal was that the seller's first offer was for owner financing.
Keep reading the investors on BP. There are a ton of knowledgeable and generous people here. Pick a niche in investing and start your journey.
Good Luck
Gino
Great thread, I'm in the learning process. I really appreciate all your knowledge in this subject.
I'm a RE agent but these tips are awesome. Gives me great insight for my future goals in RE investing in Puerto Rico.
Thanks guys!