No Cash? How to acquire Rental Properties with No Money Down!

116 Replies

Ah, the misnomer of no money down deals. Let me see, getting my real estate education...FREE, my time whilst learning about these types of deals...FREE, finding sellers...FREE, negotiating deals...FREE, Understanding legal contracts...FREE, and the list goes on. All at no cost to me!

The only thing of real value is YOUR TIME. The one thing every human being has in equal value is the amount of time we have in every single day. 60 Minutes per hour, 24 hours per day no matter who we are, what we believe in or how much money we have. NO money down...I think not. The difference is where has the money been expended before the deals are done? Where has the money been put down? Or is my time not of real value?

Originally posted by @David Nolan :

Ah, the misnomer of no money down deals. Let me see, getting my real estate education...FREE, my time whilst learning about these types of deals...FREE, finding sellers...FREE, negotiating deals...FREE, Understanding legal contracts...FREE, and the list goes on. All at no cost to me!

The only thing of real value is YOUR TIME. The one thing every human being has in equal value is the amount of time we have in every single day. 60 Minutes per hour, 24 hours per day no matter who we are, what we believe in or how much money we have. NO money down...I think not. The difference is where has the money been expended before the deals are done? Where has the money been put down? Or is my time not of real value?

Hi David

I have lived in Auckland New Zealand, and Sydney and Melbourne Australia,deals I've done there really cost me some money re :  were solicitors (lawyers)

I must've spent 10 grand in one year on solicitors taking my US contracts and making them Aussie and Kiwi kosher

Love the Gold Coast mate!

@Brian Gibbons Great place. I live 40 minutes drive away from the Gold Coast. Good to hear you have experience in my market. Not easy to make a dollar here at present. Looking to do some deals on your side of the world.

I like your comments and your desire to help people. Too many novices get ripped off by doing things they really don't understand. Perhaps a weekend workshop could be put on by people like yourself and @Jay Hinrichs and others from BP to help novices learn from real professionals. I found when I last did mentoring that people I mentored had done numerous courses and paid lots of money to learn about how to do deals, but never learned about the emotional issues, the psychological issues, the real costs of risk and stress. A workshop taught by experienced professionals not so much about how to do a deal, but how to live with a deal. Real life expectations. It is certainly needed here in Australia.

Hope we can catch up one day when I am next in the USA.

@David Nolan   Hey David I am coming your way tomorrow,,, Hong Kong Singapore Thailand... not exactly in your neighborhood but close.

Next trip will be a true down under.

As you know I but many thousands of post on the Aussie websites... trying to enlighten your country men on how to invest safely in the US>

Originally posted by @Brian Gibbons :

@Ben Leybovich OMG, and I know you are a senitive Russian lol

A plug to my good friend Ben L

Ben is an awesome TEACHER and TRAINER of multi family acquisitions.  

He knows how to negotiate terms of MF deals better than anyone I have EVER known, and that's over 30 years in the REI game.

See 

https://www.youtube.com/user/JustAskBen

Free videos on the MF space. 

 Except perhaps for Brian Burke ;-)

@Jay Hinrichs Hope you enjoy the trip. As you say. close but not quite. 

Thanks for trying to teach my fellow countrymen how its done in your world. The posts here on BP help us a lot, if we spend the time to learn.

I would also like to teach them, but from what I have learned we need good people on the ground to assist. Skin in the game makes a whole lot of difference. I think that there are opportunities for JV's between people in the states and here in Aus. Would need a lot of work though.

Safe travels!

Originally posted by @Roy N. :
Originally posted by @Brian Gibbons:

@Ben Leybovich OMG, and I know you are a senitive Russian lol

A plug to my good friend Ben L

Ben is an awesome TEACHER and TRAINER of multi family acquisitions.  

He knows how to negotiate terms of MF deals better than anyone I have EVER known, and that's over 30 years in the REI game.

See 

https://www.youtube.com/user/JustAskBen

Free videos on the MF space. 

 Except perhaps for Brian Burke ;-)

Well yeah.  And that's an understatement.  Brian's in the game in a way that few here on BP are.  And he's seen a few markets (for such a youngster).  We're lucky he stops by now and then.  

Originally posted by @Brian Gibbons :

i'm gonna start a thread: "What's not good about no money down ideas"

I'll post the link here on this thread

This board is full of fluff and does not discuss real dangers of no money down

Also about private lending and joint venture partners re: how careful you have to be with other peoples money

@K. marie P.

The weird, inconsistent thing is that I'm a fan and believer in "no money down". But it's hard to sit quietly when it gets blown way out of proportion in order to sell to newbies. Same thing with subject-to. Sub2 is the ticket for some deals, especially short term. But it's not for poor people. One of the very best things I ever read here on BP was not to use sub2 to solve your buying problems (lack of cash and credit). But sub2 training is often (mostly?) marketed to those without cash and credit.

Originally posted by K.marie P.:
Originally posted by @Roy N.:
Originally posted by @Brian Gibbons:

@Ben Leybovich OMG, and I know you are a senitive Russian lol

A plug to my good friend Ben L

Ben is an awesome TEACHER and TRAINER of multi family acquisitions.  

He knows how to negotiate terms of MF deals better than anyone I have EVER known, and that's over 30 years in the REI game.

See 

https://www.youtube.com/user/JustAskBen

Free videos on the MF space. 

 Except perhaps for Brian Burke ;-)

Well yeah.  And that's an understatement.  Brian's in the game in a way that few here on BP are.  And he's seen a few markets (for such a youngster).  We're lucky he stops by now and then.  

 Brian Burke is the best there is. Nothing much left to say past that...

Hang on a minute.....

@Ben Leybovich course on multis is like a freshman finance course on multi's, cant get it at a community college, need to go to a great school like Ohio State Finance School .

@Brian Burke and @Bryan Hancock

Those 2 guys know more about SEC regs (e.g. Reg D) for private lending and syndications, stuff that I defer to my SEC attorney.  For getting LOTS of money.

One is undergraduate, one is law school.

Apples and Oranges, not the same.

@Brian Gibbons - that's exactly the correct assessment!

I have been fortunate to work with @Brian Burke for almost 2 years now - I guess you could say I've been in post-doc program. And here are some interesting facts:

On one hand, the only reason I was even admitted into the program, so to speak, is because of the things I already knew, which are the things I teach in my Cash Flow Freedom University.

On the other hand, I've had to quite literally to set aside 80% of what I knew in order to open my mind to another level of thinking all together.

Put differently, you have to know and internalize all that is in CFFU in order to have a chance at eventually growing out of it, transcending past it, and internalizing the thinking of the higher level. Just like you have to complete undergrad before entering master and doctoral programs. Not to mention that some of the aspects of Brian's thought simply require experience of the dynamics - CFFU gets people that starting point upon to base some experience.

This is BP - otherwise known as the most anti-guru place on Earth. But, I stand by CFFU. I truly believe that it teaches folks to think the right way about REI, and represents an honest starting point from which to grow - much as an undergrad program does.

Thanks for the kind words, Brian!

WOW - there's A LOT going on in this thread!

I'll just put an over-simplistic statement out there:

YES - 100% financing is possible

YES - interest and other fee's will probably eat up all your cash flow and profit.

Over the short-term anyway...

Caveat Emptor 

Originally posted by @Brian Gibbons :

@Ben Leybovich

you can do it and you can teach it, a rare combination. :)

If you are in the Multi space, take the affordable course from www.AskBenWhy.com

 haha it's the thought that counts, but it's www.JustAskBenWhy.com

:)

@Ben Leybovich

Oh well thanks for correcting me 

you would have to put it just in front of it

Askbenwhy is just quicker!

Anyways I bet what you know in the detail of the multi space for the newbie is a much better foundation either of the two Bryans-Brians  can do :)

Just because you can buy a house with no money down doesn't mean you should. Most people have money problems who want to start off in real estate. You need to have a large enough safety net to bear the risk of losing it or having additional expenses. The people who make money off no money down deals have often been in the real estate game for several years, and I'm willing to bet their first deal they ever did, was not a no money down one.

Originally posted by @Vincent Crane :

Just because you can buy a house with no money down doesn't mean you should. Most people have money problems who want to start off in real estate. You need to have a large enough safety net to bear the risk of losing it or having additional expenses. The people who make money off no money down deals have often been in the real estate game for several years, and I'm willing to bet their first deal they ever did, was not a no money down one.

 Vincent I believe most of that is true but not for me. 1986 I have a mentor to coach me on Hard Money and rehabs.

I found it through marketing a real stinky property, and made $16,000  using none of my money. The terms were 10 points, 16% interest only, one year call.

But I definitely had help regarding coaching on "what not to do."

One of the greatest things he did was to introduce me to people that could help me down the road, such as financial, legal, and tax advisers.

I got the coaching by working as an acquisition manager , in his office, and have a great training. He taught me how to talk to Sellars, I'm not to be any of your buyer, how do use appeal to a higher authority, how to use arrange technique when negotiating price, and much more.

I saw 4 Sellers a day for 2 1/2 years, seeing thousands of people over those 2 1/2 years. Also, my business partner had over 35 years experience so he was like a grandfather to me. 

I quit after 2 1/2 years and start my own business making 100,000 my first year because I had the training.

And this was in 1986 so I was a long long time ago

My boss said, "You treated me like family. You will be sorely missed"

And he said,

"Brian, you work harder than anybody I know, even my sons."  He even staked me enough money to start my own office, $15, 000.

Being an apprentice in Real Estate Investing really really helps you get your skills up. Sales, marketing, finance, legal, tax, promotion, hiring, firing, etc.

And by the way, over those 2 1/2 years working for my boss I only made 500 a week, and he made tens of thousands a week.

I know a lot of newbies say, "patience  my *** I need to check now!!!!"

Without the training all you got is dreaming :)

And negotiating a no money down deal does take talent and it takes resources to prove to the seller that you're for real

Doing sandwiches and subject to and not having resources is foolish and irresponsible, to you, the seller and buyer\renter

@Brian Gibbons Yeah but in 1986 the economy was booming, interest rates skyrocketed because it was the glory days of the economy. Housing is way less affordable right now in most markets, and wages are stagnant, which is why the fed didn't raise rates. I'm just saying for the average person on this site who makes an average salary with no money, and little to no reserves, with no experience, trying to do a no money down deal is not a wise idea. 

They'd be much better off saving a decent reserve, then getting a cheap SFR rental for $60-$100k that cashflows, or house hacking by buying a duplex with an FHA loan for 3.5% down so they can learn how to landlord and start off with a small chunk, but also be able to hand the financial risk of real estate. Making a deal happen with no money down is great, but newbies should really be steared away from it because they normally lack both money and experience. New investors should not be dragged into a low money down deal with hard money lenders with high points and fees when they have no idea what they're doing. And they likely won't be able to recognize a deal as well, and so their minimal cashflow will get eaten up. Prices are high in most major markets again, and getting into real estate with no experience can be a costly mistake. I advise people start out somewhere, but not with $0 in their bank account.

Jumping in having read maybe half of this thread but here goes:

100% financing is available - from banks on some countries, more exotic means in most others.

I know its been discussed before but worth reiterating here - seller financing can be a great option for those who can't afford loan down payments or obtain financing vain usual means (aka bank), but buyers should be careful as *most* people prefer to get paid in full when selling and only offer seller financing if either they can't sell the place otherwise or are getting insanely good terms in return. 

I know a few people who have gotten into real estate with no initial cash by making deals with parents or relatives who are refinancing loans by having the person refinancing max out the LTV of the loan and then taking on the "excess" portion of the loan. They get lower rates but goes without saying if something goes sour you'll lose more than your property/money.

@Vincent Crane

Starting out with no money is tough.

Working as a licensed agent in sales or PM is a way to pay bills and know your market and network.  Work for investors, and know your local customs.

Getting capital for start up, as REI is a business, try borrowing from family, look into self directed iras or solo 401ks.

@Dmitriy Fomichenko and @Brian Eastman are great at SDIRA and Solo 401ks.

Solving problems for sellers, like lease option assignments (being licensed) generating 3% as a fee is one cheap way to get started.

So is doing a JV with a seller using private lender IRA money is also a unique way to get started.

You need reserves and ability to borrow for sub2, wraps and sandwich lease options.

@Brian Gibbons Definitely agree on self-directed IRA and knowing your market, but most newbies won't have that market knowledge and if they do get access to private money and have no reserves because they thought they could do deals with no money down, they'll be in trouble with their lender, especially when an eviction, HVAC, foundation issue, or some other variable comes into play. I just think for 99% of people starting out, if they don't have reserves or money at all, trying to do a no money down deal is way too risky. You need to have money, even if it's not used in the deal itself, just as an emergency fund.

Geez @Vincent Crane

People can get the capital.

They also need:

  • Negotiation Training
  • Good Contract Attorney
  • Prospecting Skills
  • Sales skills
  • A business quick start Plan
  • A sales license in many states to do creative deals
  • a coach to get started
  • not chasing "shiny objects"
  • support from spouse

I find your tone a little defeating, why not give some advice on how to get started?  You are 25, how did you get started?

@Joe J. owner carry is your option if you do not have the desire or ability for the down payment and the reserve requirement.  When you are doing an owner carry be aware that you most likely will over pay for the property.  I would suggest you get an appraisal to find out how much you will be over paying.  I also recommend you collect from the seller the current rent roll and last years tax returns on the property.  You want to make sure the deal not only will cover your payment but that it will cash flow.  If the seller carry payment does not allow the property to cash flow than what is the purpose of buying the property?  If your goal is to flip it be aware it might be difficult to flip the property does not cash flow.  Don't buy a property just for the sake of buying a property.

Good luck to you.

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