Margins with no money down!?

[Daniel J.]

If you are using none of your money, are you willing to take smaller cash flow margins? For your profit, not paying back your investors. I realize that if you put no money down, and you make even $1 you are technically making unlimited COC returns. However, you can't take percentages to the bank. I would love to know your thoughts.

Thanks,

Daniel 

[Alexander Felice]

Well you're only taking $100 a door if you're using a ton of leverage anyway.

If you use your own cash, your return actually goes DOWN. that's why it's called leverage. It lets you move more, for less effort.

Lets use a semi-real example, I just bought a house all-in for $60K. I paid 100% cash

it rents for $900 per month. I run about a 45% expense ratio, heres what I get:

   net cash flow is: $495

CoC return is: 9.9%

   I have zero cash in the bank

If I put a 60K loan on that, and I'll have ZERO of my money invested. heres what I get:

   net cash flow is: $495- $313 (debt service) = $182

CoC return is: unlimited

   I have 60K in the bank

Which deal would you rather have?