Robert G. Allen No Money Down !?! Is It Possible ?!

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Robert G. Allen No Money Down !?! Is It Possible ?!

Edwin Duran
Orlando, FL · Member since 2014 · 62 posts · 17 votes

Hello BP'ers

So I just wrapped up reading Robert G. Allen's book "Creating Wealth", and I was really intruiged by his methods of financing his deals. He is really trying to drive home the point of finding win, win deals with as little money down as possible using seller financing. But my question is, how often can you come across these deals? Is it really possible to buy property with no money down? Im assuming there is a level of complexity that goes on in finalizing these deals..

Looking forward to your comments.

Thanks.

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Rick H.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y

I found myself at Mr. Allen's home at a BBQ several years ago. Not surprisingly, my other real estate friends and I had all researched ownership of his house before the party. Title not in his name.

As to no money down, sure it's possible. The odds are good that the goods will be odd. But the fact is, you'll occasional find a deal where down payment just isn't essential to make the deal. Example: you solve a problem that others can't, won't or don't know how to solve.

Jay Hinrichs - did you translate your Australian book into English? : )

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  • Edwin Duran
    OP
    Orlando, FL · Member since 2014 · 62 posts · 17 votes
    12y
    Originally posted by @Ben Leybovich:
    Hah - that's how I've bought everything I own...

    HA! The power of leverage has helped you immensely! I guess that even if the super rich use other people's money, we should do the same? Pending that we know what we are actually doing.

    0Reply
  • Aaron Mazzrillo
    Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
    12y

    In July of 2011, I purchased a 1987 built, 1,500 sq/ft single story house from a private party for $81,000.

    The hard money lender's appraiser valued the house around $180K.

    I borrowed $105,000 from a hard money lender. 

    I spent about $15,000 on rehab and rented it for $1,550. 

    Not only did I buy the property with no money down, I got pocketed a few thousand (tax free) to buy, it cash flowed while I owned it (zero days vacant once it was rehabbed) and I currently have it listed for $270,000 with multiple offers received from $260-$265K.

    So, yes it is possible. I just wouldn't try to make a business model out of it. Otherwise, I wouldn't have purchase 127 of the other 132 houses I bought since then. (I've done this similar deal a few times since.)

    I was also at Robert Allen's house for a BBQ and will confirm it was not in his name, but definitely looked like he was living there full time. I did not ask him if he was leasing it or how he acquired it though... but it was exceptionally nice.

    1Reply
  • Ben Leybovich
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    12y

    Well, there's much more to it than just leverage.  And, while naturally I've heard the name, I have no experience with Allen's program.  My contribution to your thread is to simply state that yes indeed, creative finance and $0 down definitely works on the acquisition side of things.

    0Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    12y

    @Edwin Duran 

    @Ben Leybovich 

    is absolutely right there is much more to buying real estate than getting a "Nothing Down" deal.  One of the promotions Robert Allen did when the book first came out was that he said take me to any city in the US, take away my wallet and I'll still be able to buy real estate "Nothing Down".  The LA Times took him up on his challenge and sent him to San Francisco for a week with no money to buy real estate.  Which he did.

    But the other side of "Nothing Down" is that sometimes people make it their ENTIRE focus and forget about positive cash flow, appreciation potential, quality of the neighborhood or the property and a bunch of other issues.

    Back when I met some people who went through Allen's and did do some Nothing Down deals, but the three deals that they showed me looked to me like they overpaid for the properties, cashflow was marginal, and one of the properties was rough with a lot of deferred maintenance.  Yes, they did buy Nothing Down, but in the end lost all three properties.  The last time I went by the deferred maintenance house it was boarded up and of course un-occupied.

    Too much leverage, too much debt service, and too little cash flow can topple any real estate investment.  

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Manch Hon 

      I am not an expert on OZ RE  although those I know there say that RE is on the rebound.

    And the OZ investor has basically stopped buying US for a few reasons.

    1. Cash flow promises of 20 to 30% never materialized.

    2. Many of their properties here in the US are vacant and stay vacant.

    3. There have been National News stories of the perils of Turn Key investing in the US.

    4. Even the marketing guys are getting somewhat realistic with their returns these days showing 8 to 10% net.. And the OZ investor can put their money in a bank for 4 to 6% so why go to the US and risk on a rental.

    5. Their market is picking up steam again.

    Bubble.. certainly can be in all those countries and citys.. I think the major difference that is hard for us US investors to compute is that Canada and OZ only have 35 million or so total population. So they just don't have huge hangover inventory... CA has the China influence I owned property in BC and the Chinese have bought huge in Vancouver ( don't know about Toronto) and they pay cash much of the time.  So with RE being owned for cash bubble is less likely.. Then you have their natural resource based economies.. As long as China keeps going I think they keep going but there is signs of this weakening.

    that's my take on it.

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  • Michael Lemieux
    Investor · Deerfield Beach Florida and Tupper Lake, N.Y. · Member since 2013 · 307 posts · 118 votes
    12y

    @Edwin Duran , not to take up too much room on you thread, I wrote about both of those deals on my blog.

    http://beta.biggerpockets.com/blogs/4462/blog_posts/31278-first-deal-s

    0Reply
  • Amit M.
    Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
    12y

    @Jay Hinrichs  thanks for the tid bits on Australian RE.  But what I don't understand is that, unlike Bay Area RE, there is plenty of space to 'over build' in Australian.  I'd expect their market to boom/bust more like NV or AZ, but I know that is not the case. Is land use highly restrictive there (Like much of Western Europe)?  Or maybe the high prices are just in the main city metros?

    0Reply
  • Billy Rogers
    Investor · nowhere, TX · Member since 2012 · 242 posts · 84 votes
    12y

    No money down is fine if you can handle the expenses without any cash flow from the property.  I bought a house last week with no money down.  I have other properties that cash flow and have cash available to cover any repairs or other expenses.  I already have a tenant moving in this week and the house will be paid off in two years.  I couldn't handle too many of these deals at one time though.  I would never recommend to beginners to just run out and acquire a whole portfolio of non cash flowing properties.   

    0Reply
  • Ruth Bayang
    Investor · Kent, WA · Member since 2015 · 624 posts · 274 votes
    10y
    Originally posted by @David Krulac:

    @Brian Gibbons 

    "No Money Down" was actually written by Carleton Sheets

    "Nothing Down" was written by Robert Allen

    And Carlton Sheets learned everything he knows from Robert Allen

    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    10y

    and I have met the oldest of creative financing teachers Albert Lowery, and my best mentor was without peer, The wonderful Barney Zick

    If you can get some used books by Mr Lowry, check Amazon, you will get ideas on how to be truly creative using money and real estate

    A lot of Internet boards whether it's BiggerPockets or someplace else don't dive deep enough into being creative and it's your job as a real estate investor to go talk to title companies and attorneys about how to get win-win agreements with sellers of real estate and yourself, The Real Estate Investor, using such as tools as sub two, joint ventures, private lending, equity participation, options, bundle of rights, etc.

    @Ruth BayangReal Estate investing is not about just about filling out a 1003 loan application at a bank and praying to God that you get the money

    If you're truly skilled, you can avoid banks completely

    @Rick H.

    2Reply
  • Ruth Bayang
    Investor · Kent, WA · Member since 2015 · 624 posts · 274 votes
    10y
    Originally posted by :

    Real Estate investing is not about just about filling out a 1003 loan application at a bank and praying to God that you get the money

    If you're truly skilled, you can avoid banks completely

    I have never used banks for any of my RE investing. Not sure what you're referring to

    0Reply
  • Tom S.
    Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
    10y

    @Edwin Duran  Edwin - I just came across this thread and looks like you started it over a year ago.  Did you move forward with any of these methods?  Can you give us an update?

    Thanks!

    -Tom

    0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    10y

    @Edwin Duran,

    The key to understanding "no money down" is to understand that it does NOT mean what it says.

    Interpret "no money down" as "the down payment came from someone else". Other people will say it this way " ... with none of my own cash or credit". That is to say, they had partners who put in the money while the investor provided the expertise and project leadership to make the deal happen and follow thru to completion.

    Hope that helps...

    0Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    @Brian Gibbons

    I've seen Al Lowry speak a number of times the first time was in the 1980s and the last time was about 2 years ago.

    I've also seen William Nickerson, who wrote the first very popular book on real estate, "How I Turned $1,000 into $1 Million." later revised to 3 million then 5 million.

    Lowry and Nickerson joined forced and went across the country teaching real estate.  The basic premise was that an average person of average intelligence could make it big in real estate.  They were bring real estate investing to the masses.

    I consider Nickerson to be the first real estate guru, and those that followed like Robert Allen, Carleton Sheets and Ron LeGrand to be disciples of Nickerson.

    Nickerson's book is one of my favorites and Al Lowry's first book is very similar.  Both are worth while reading.  

    1Reply
  • Alexander Pezzutto
    Small Business Owner · Lethbridge, Alberta · Member since 2015 · 20 posts · 8 votes
    10y

    There is no money down and there is also LOW money down. If you don't have enough, you can find a line of credit of some sort (Epic Fast Funding.com for example) that will make you pay no interest for a time (they say 12-18 months). This credit pays for your down payment (they do $50k-150k). It costs about $3500 to use though.

    You can then get connected with some financing to cover the rest. Then you have a year to either make up the money to pay it off or to find private lenders to invest in an already set up deal to cover your down payment (and maybe the whole of it if you want). 

    That year of time will likely have paid for the $3500/month in cash flow that you didn't have before if it is being rented out. Voila :)

    1Reply
  • Ellis San Jose
    Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
    10y

    My goal is to extract maximum profit from a transaction, the how is secondary.  It has to work .  Orchestrating a low down, no down or any creative method is not the point. Whether it's your money, someone's else's money or the sellers money, what's the point if at the end of the day it isn't profitable.

    1Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    10y

    The basic concept of acquiring or at lease controlling real estate without your own money is not new.

    Yes, Bill Nickerson was the first to preach the idea of pyramiding real estate for the average man or woman and teach a formula that worked. 

    Jack Miller obsessed about controlling properties using options in order to avoid listing as an agent. 

    Bob Allen obsessed about avoiding putting his own money into deals. I'm always nervous about no money down deals becase at some point money is usually required (later) and the profits are often thin, at best. I was invited and attended a party at Bob's home in tawny Rancho Santa Fe, CA however I cannot recall how I came to be invited nor spending any time chatting with him.

    Barney Zick solved a big sales-related problem I was having and helped me tremendously. He was recently divorced and met a fellow mastermind member during a Jay Abraham event some years ago and I think they got chummy and was getting serious before he got sick. It all started when she heard he needed a frying pan and she owned a gourmet kitchen equipment shop. Both, very nice people.

    0Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    10y

    The "wholesaling flipping only"crowd out there in REAL ESTATE INVESTING are missing the boat, like having pancakes every day for breakfast

    0Reply
  • Justin Ericsson
    Professional · Glenview, IL · Member since 2015 · 114 posts · 65 votes
    10y
    Originally posted by @Edwin Duran:

    Hello BP'ers

    So I just wrapped up reading Robert G. Allen's book "Creating Wealth", and I was really intruiged by his methods of financing his deals. He is really trying to drive home the point of finding win, win deals with as little money down as possible using seller financing. But my question is, how often can you come across these deals? Is it really possible to buy property with no money down? Im assuming there is a level of complexity that goes on in finalizing these deals..

    Looking forward to your comments.

    Thanks.

     The best strategy I have here in chicago is buying with hard money lender 15% down on project cost to bankroll purchase and rehab. You need to be at 70% all-in on appraised value so you can refinance with b2rfinance.com after 90 days of seasoning. They will loan 75% loan to value which gets you 100% financing. Here is example ...

    Single family home worth $200k appraised value that you buy for net purchase of $100k that needs $40k in rehab. Let's assume your finance cost for 3 months is $6k using hard money and you have $4k refinance costs with b2r. That puts your total cost at $150k for a $200k home. $200k x 75% = $150k therefore you get 100% financing on the refi to hold long term. The only bad part in this equation is btr has $300k min loan so you have to do 2 at the same time. The interest rate will be higher around 6.5% but you do get 100% financing in this example. 

    Now to the question of little money down ... My hard money lenders require 15% down on the total cost short term which in this case is 15% x $140k which equals $21k that I get back in roughly four months when i refinance. Therefore I can easily buy 3 to 4 houses per year to get 100% financing with the same $21k investment repeating the cycle every quarter. 

    To compare to buying a finished house for $200k your down payment conventionally stuck in the house for 30 years would be 20% down or $40k and you can only buy one house vs 3 to 4 per year with half the cash using creative financing. 

    These are the tricks I teach to my clients to jazz up their portfolio returns using as little cash as possible. 

    1Reply
  • Yanis P.
    Steger, IL · Member since 2016 · 57 posts · 13 votes
    9y
    Originally posted by @Manch Hon:
    Originally posted by @Jay Hinrichs:

    OZ real estate is the same as the SF bay area.. with the finer areas Like SF and peninsula average prices 800k and up... Same in OZ in the bigger cities.. Average little bungalow there is 350 to 500k... They are RE nuts.

    OZ RE is one of the biggest bubbles today, in the same league as Vancouver or Toronto RE I think? What's your thought when the bubble will pop?

    What "OZ" stand for? is it just name of the company?

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