OK. So - unless you live under a rock, you've by now listened to Podcast 108 featuring Grant Cardone. If you listen between the lines, and you don't have to dig too dip, Grant has nothing particularly nice to say about the no money down strategy. He makes this point of view known elsewhere as well... Since you absolutely can't argue with Grant's success, and he absolutely must be taken very seriously, where does this leave Ben Leybovich and @Brandon Turner who are notorious on BiggerPockets for nothing short of nothing down?! My thoughts: Grant is not so much trying to create income in RE, but to change the face value of earned income in his businesses to RE income, which is not only taxed lower, but Grant feels is more stable. To him, RE is not a stepping stone - it is the destination. All good by me... Now - consider myself. I've built a portfolio of multifamily which has allowed\s me not to work for a living. I pursued the nothing down strategy because it was the only option - I am not smart enough to start businesses and unfortunately, while I was quite good at playing the fiddle, because of the MS diagnosis I was unable to pursue that career (not that it would have been a career capable of generating any serous revenue anyhow). Jump to today - my partners and I are currently negotiating on a 90-unit out of state. This means a couple of interesting things: 1. This deal, if it grows through, will make me, and the investors, some respectable money. 2. I have partners, without whom I could not do this kind of a deal at this point. Both of these guys have more money and units than I do today (though this is not going to last). Both of them, I'd like to believe, take me seriously... Why - because I've done a lot of shit, and I've learned enough to not do even more shit. They think I am not stupid. Guess what - I got smart doing nothing down deals... 3. I've been using OPM for 8 years now, and if this deal comes through, I'll be floating a PPM of $1,000,000+; I will raise $1 mil from investors who agree with my partners in that I'm not stupid and know what I am doing. Guess what - I got smart doing nothing down deals... To me - nothing down is not a destination. It is a stepping stone. I am going to turn 40 in March. I have a portfolio (all bought with nothing down) that has allowed me to do vastly better financially than any music student I went to college with. It has allowed me not to work and focus on learning RE, and it has bought a margin of financial safety for my family which is better than any of my friends...even those earning high incomes... And now, I have put myself in position to do much bigger projects, which, after a few years, will begin to cash out big. At the end of this road, I will be able to retire with free and clear A Class RE with the money I parlay from my syndication pay days... All of it was teed up by having the audacity to not listen Grant Cardone and go for it in the only way that I could - No-Money-Down! I've built a small business in RE. Now, I am growing that business into an empire by re-investing the dividends from the business I already have. There is some money I can throw around now, but mostly knowledge is the biggest dividend. Thus - while no one can disagree with success, I'll take a stand. I disagree with Grant Cardone - No-Money-Down does work. However, in this strategy RE is not the final destination, but a stepping stone to bigger and better things. I am the poster child of this... Thoughts?

@Ben Leybovich GREAT Post! Your point is very important. You see people in BP toting different strategies. I like your point, end versus stepping stone! We got started in no -money down personal properties to 20% down investment properties. We couldn't have started where we are now because we didn't have the capital or background! The one thing I like to say about BP. Is the only two things we all agree on is 1) helping others and 2) investing in real estate. Beyond that everyone has their own, niche, story and philosphony. Learn from others and create your own :) Thanks for a great post!

@Serge S. - OK, I'll bite. You are right, NMD is a business, it's not investing. Syndication is a business. Turn-key operation is a business. Hell, 75% of people who win the REI game are in the "business" of REI. What your point? Are you suggesting that people don't do REI business because it's work? Are you saying they shouldn't acquire assets and allow others to pay off the debt to facilitate retirement with more dignity than their friends on SSI? That's just ass backwards, Serge! And as to your point of management in lieu of ownership, let's think: Let's assume you are right, and in order to generate $3,000/month of cash flow requires similar time commitment if doing management as well as ownership. I disagree with that, cause ownership takes far less time and energy than management, but let's just assume. This means that in both cases we are trading time for CF - fine. However, trading time in this way and being the owner will over time build one's balance sheet. You get richer every night while you sleep - not because you manage other people's property, but because you mortgages are being amortized for you. Me too... Thus, if you think that CF is fickle in principle, and what matters is building a bullet-proof balance sheet, the managing other people's property does nothing. I'd rather finance a property 100% and break even on it for 20 years, and build up some sort of a nest egg - presuming it's the right kind of property - not a $30,000 pig :) I agree with you on most things, my friend, but on this you need to get off your high horse. People who are willing to hustle and educate themselves will do just fine for themselves using NMD to advance. Furthermore, for many, and I include myself among them, NMD is the best alternative and the only way to meaningfully advance their financial agenda. Thoughts?

@Joe Villeneuve We're just going to have to agree to disagree here. I've seen too many NMD RE investors go bankrupt during the bad times for you to convince me that NMD is lower risk. I have simultaneously seen many people consistently put substantial money down and slowly build multimillion dollar portfolios over the course of 3-4 decades with little concern for whether times were good or bad. Some NMD investors can weather the bad times just fine. Some who put substantial money down will occasionally lose properties. However, over the long haul, conservative investing with substantial skin in the game is how I have see great wealth accumulate in my area.

@Ben Leybovich I do live under a rock a mossy one at that. so did not listen to the podcast. OP said that a statement was made that Multi family is bullet proof and you can't lose and he took exception to that statement.. I would also.. We have all seen nice properties get run down and those that owned them lost big time.. Just like any other asset you can and people do lose in Multi if you don't know how to run it.. Or your multi got over taken by the Ghetto ect. but your example of the deal your doing is simply stating YOUR putting non of your money down.. But the deal requires actual cash equity that is coming in through your PPM.. Nothing new or original in that concept or way of structuring the deal and its far from No money down. Your leveraging your contacts with OPM there by putting you into the deal with NONE of your own cash... Many of us in the business have done this,, do this , and will continue to do it. In my mind true NMD is buying an asset with no partners and putting none of your own money into the deal.. which usually occurs in some sort of Sub too or owner finance deal. And these deals happen all the time and in all markets..

I buy NNN leased commercial property with bond quality credit tenants without coming out of pocket a dime. Net result? In 15 years I own them outright. Do you think I care about cashflow? Nope. But just to be sure I don't get "beat up" for saying that, they do have positive cash flow. "Nothing down" in my world means "I walk in with nothing and out with a million dollar property, and cashflow". So yeah, nothing down works just fine.

I think the term NMD is misleading especially to new investors like myself. As Brandon Turner said on one of the podcast, even though it's NMD, he is bringing other values to the deal. NMD should be renamed to "None of My Money Down But Somebody's Money Down". With guys like Brandon, they are able to use OPM to make down payment, because they have enough experience and skills in REI, and they bring awesome deals to investors. From what I can tell successful NMD comes with track-record and experience. So noobies like myself will have a hard time starting NMD deals. And even if I could, I probably wouldn't go this route atm, because I know I will be making mistakes all over place with my little or no knowledge in REI. I rather make mistake with my own money at first to learn rather than playing with OPM and become liability. I like Grant's podcast. He didn't go into too much detail how he financed his properties, but it sounds like he had built couple of business prior to building his REI empire, and Grant used the profit generated from those business as down payment. So he is able to create a huge down payment for those multi-million dollars apartment deals because he has three of business running in the background to support it. I mean how many noobies out there can make down payment of 300k like he did? And if people think Grant's way is the only way to become successful in REI, I ask you what about Ken McElroy? In Ken's Podcast, he mentions his multi-million dollars apartment deal with NMD. Is Ken's methodology incorrect since Grant said NMD doesn't work? That's what I love about REI. There are many different routes you can take to reach your destination. You just gotta figure out which route works best for you.

I loved the podcast with Grant. You got my text right after I listened to it! It was motivational than a real estate strategy podcast though. I, like you have built my 42 unit MF portfolio with no and low money down creative financing and agree that it has taught me more about REI had I had the money to go conventionally. Not only have I already done bigger deals than most buy and hold guys in my area I will continue to go bigger. I've posted in many of the, "I have $100k in cash to invest, where do I start?" type threads with the message to put the money in the bank and forget you have it. Find a way to buy without it and you'll go way farther in this business!

@Joe Villeneuve - I don't disagree with Grant that too much leverage is not a good way to retire. Therefore, I really do view nothing down as a stepping stone... Having said this, I get richer every month. My balances are being paid off every month. Not to mention that if I didn't become a master of nothing down, my options would have been exactly nota... It served a purpose. Doing something in lieu of doing nothing. Learning to be creative as all hell, and patient to take action only on the best deals. Thanks indeed!

Gregory Hiban hard to establish net worths by neighborhood... many are leveraged to the hilt and that goes for many professionals and others in that age bracket.. to assume 2mil net worth plus is a little bit of a reach I would think... but hey I have never been there and don't have the foggiest clue.

Creative Real Estate Financing

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Does No-Money-Down Work...?!

Ben Leybovich

Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes

OK. So - unless you live under a rock, you've by now listened to Podcast 108 featuring Grant Cardone. If you listen between the lines, and you don't have to dig too dip, Grant has nothing particularly nice to say about the no money down strategy. He makes this point of view known elsewhere as well...

Since you absolutely can't argue with Grant's success, and he absolutely must be taken very seriously, where does this leave Ben Leybovich and @Brandon Turner who are notorious on BiggerPockets for nothing short of nothing down?!

My thoughts:

Grant is not so much trying to create income in RE, but to change the face value of earned income in his businesses to RE income, which is not only taxed lower, but Grant feels is more stable. To him, RE is not a stepping stone - it is the destination. All good by me...

Now - consider myself. I've built a portfolio of multifamily which has allowed\s me not to work for a living. I pursued the nothing down strategy because it was the only option - I am not smart enough to start businesses and unfortunately, while I was quite good at playing the fiddle, because of the MS diagnosis I was unable to pursue that career (not that it would have been a career capable of generating any serous revenue anyhow).

Jump to today - my partners and I are currently negotiating on a 90-unit out of state. This means a couple of interesting things:

1. This deal, if it grows through, will make me, and the investors, some respectable money.

2. I have partners, without whom I could not do this kind of a deal at this point. Both of these guys have more money and units than I do today (though this is not going to last).

Both of them, I'd like to believe, take me seriously... Why - because I've done a lot of ****, and I've learned enough to not do even more ****. They think I am not stupid.

Guess what - I got smart doing nothing down deals...

3. I've been using OPM for 8 years now, and if this deal comes through, I'll be floating a PPM of $1,000,000+; I will raise $1 mil from investors who agree with my partners in that I'm not stupid and know what I am doing.

Guess what - I got smart doing nothing down deals...

To me - nothing down is not a destination. It is a stepping stone. I am going to turn 40 in March. I have a portfolio (all bought with nothing down) that has allowed me to do vastly better financially than any music student I went to college with. It has allowed me not to work and focus on learning RE, and it has bought a margin of financial safety for my family which is better than any of my friends...even those earning high incomes...

And now, I have put myself in position to do much bigger projects, which, after a few years, will begin to cash out big. At the end of this road, I will be able to retire with free and clear A Class RE with the money I parlay from my syndication pay days...

All of it was teed up by having the audacity to not listen Grant Cardone and go for it in the only way that I could - No-Money-Down!

I've built a small business in RE. Now, I am growing that business into an empire by re-investing the dividends from the business I already have. There is some money I can throw around now, but mostly knowledge is the biggest dividend.

Thus - while no one can disagree with success, I'll take a stand. I disagree with Grant Cardone - No-Money-Down does work. However, in this strategy RE is not the final destination, but a stepping stone to bigger and better things. I am the poster child of this...

Thoughts?

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Does No-Money-Down Work...?!

Does No-Money-Down Work...?!

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