Handyman · Moretown, VT · Member since 2016 · 26 posts · 6 votes
I've been studying Real Estate since 1998. I had my first license in PA then, working through Weikert Realtors. We were remodeling Multi Units on Drexel University Campus. I started listening to the Sheets tapes. I thought No Money was the ticket, since all my funds were tied in student loan repayment. I have since been awakened to the fact that,
1. If you are just starting out, no one will partner with you or trust you with their money.
2. If you want a seller to finance any part of the deal, you will need a good sized DP, if the property is even worth purchasing. Many times, after the repair, depending on the area a profit is nullified.
3. Most realtors don't want to talk unless you are pre-qualified.
4. People say find a good deal and the money is easy. I think with the money, you can generally make the deal.
This is coming from a guy still trying to break the ice and get into the game.
I've been studying Real Estate since 1998. I had my first license in PA then, working through Weikert Realtors. We were remodeling Multi Units on Drexel University Campus. I started listening to the Sheets tapes. I thought No Money was the ticket, since all my funds were tied in student loan repayment. I have since been awakened to the fact that,
1. If you are just starting out, no one will partner with you or trust you with their money.
2. If you want a seller to finance any part of the deal, you will need a good sized DP, if the property is even worth purchasing. Many times, after the repair, depending on the area a profit is nullified.
3. Most realtors don't want to talk unless you are pre-qualified.
4. People say find a good deal and the money is easy. I think with the money, you can generally make the deal.
This is coming from a guy still trying to break the ice and get into the game.
Any thoughts.?
The term 'low or no money down" is designed to attract attention but it's not very realistic or wise. It's pushed by get rich quick gurus, but even people on bigger pockets that have been wildly successful.
Can it work? Yes! Go listen to podcast number 553 for a good example of someone that started with no money and turned it into a successful business. However, his story is the exception, not the rule. Go listen to stories of Kobe Bryant and how hard he had to work to become on NBA player. It's a very inspiring story, but it would be foolish to think that I could have the same success in the NBA being only 5'10" and no natural athletic abilities.
Long story short, my experience shows that the vast majority of successful investors were financially wise, they worked hard, they saved up, and they invested their money in real estate as able. Low and no money down investing is probably no more successful than buying real estate with credit cards.
I've been studying Real Estate since 1998. I had my first license in PA then, working through Weikert Realtors. We were remodeling Multi Units on Drexel University Campus. I started listening to the Sheets tapes. I thought No Money was the ticket, since all my funds were tied in student loan repayment. I have since been awakened to the fact that,
1. If you are just starting out, no one will partner with you or trust you with their money.
2. If you want a seller to finance any part of the deal, you will need a good sized DP, if the property is even worth purchasing. Many times, after the repair, depending on the area a profit is nullified.
3. Most realtors don't want to talk unless you are pre-qualified.
4. People say find a good deal and the money is easy. I think with the money, you can generally make the deal.
This is coming from a guy still trying to break the ice and get into the game.
Any thoughts.?
The term 'low or no money down" is designed to attract attention but it's not very realistic or wise. It's pushed by get rich quick gurus, but even people on bigger pockets that have been wildly successful.
Can it work? Yes! Go listen to podcast number 553 for a good example of someone that started with no money and turned it into a successful business. However, his story is the exception, not the rule. Go listen to stories of Kobe Bryant and how hard he had to work to become on NBA player. It's a very inspiring story, but it would be foolish to think that I could have the same success in the NBA being only 5'10" and no natural athletic abilities.
Long story short, my experience shows that the vast majority of successful investors were financially wise, they worked hard, they saved up, and they invested their money in real estate as able. Low and no money down investing is probably no more successful than buying real estate with credit cards.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
4y
Sheets got me I interested in RE as well. He had examples of buyers leaving the closing table with a check. Realtors taking a note for their commissions (yeah, right), partnering and or selling off part of the property or timber simultaneously etc to bring down your out of pocket.
If most people spent as much time and effort locking up a good seller as they do figuring how to not put anything into it, they'd be better off.
I've received every dollar + I've ever put into real estate, but it took time. Sometimes 10 years.
The low and no money folks should focus on types of sellers vs types of real estate.
All of my lower money down seller-financed sellers were older absentee owners looking to retire or move in a different direction that owned a long time and were facing significant tax burdens if they sold conventionally.
My avg DP was 10%. I can do less now that I have good references and a reputation, but 10% down was standard.
I'm also buying an office building with seller financing in an LLC. He needs 20% ish down, but only because there is an underlying loan. I can equity share with new members and do this with none of my own $ if I want to, but I need a certain type of person.
Find the people, not the property...
Or buy a primary with little down via VA, FHA or USDA or Homepath loan products. Simple if you've been diligent saving a few grand and managing credit.
Rental Property Investor · Member since 2021 · 29 posts · 34 votes
4y
@Robert Jordan
Studying since '98 and still trying to break the ice? I'll give you an A+ for persistence, if you were studying the right thing. I have to wonder what you were doing from 2008 to 2012. I was buying properties that I couldn't get a mortgage on because they were too cheap! I still have the Sheets material in my basement and I have a few books written by Mike and Irene Milin, who were one of the infomercial/seminar organizations that would come around every year, selling a kit and support package for around $900. At the time, I'd never seen $900 all in one place and I couldn't buy the kit if I wanted to. I would go to the seminar every year and take notes though, and then I'd go to the public library and look up every program and term they used. Most of what they were selling wouldn't work in our area, or anywhere outside of a metro smaller than Chicago as far as I can tell. That being said, I had to buy a couple of properties with no money down, just to satisfy myself that it could be done. Our first one was a small commercial property that was leased to a quasi-governmental agency that we bought from an estate. The owner's brother was a broker and had it priced lower than it should have been, so we gave him his full asking price, got a commercial mortgage, and borrowed the down payment, I think from a credit card. We've never seen a seller financing deal that made any sense for a broke person. The real money came when we sold that property six years later for double what we paid for it, and we were able to pay cash for foreclosures from banks that were going out of business in the big collapse.
To a couple of your points, now that I have a little money, quite a bit of it made in real estate, I can't imagine what value someone with little experience and less money could have to offer me in a deal. I'm always willing to listen, but I didn't get here by accident. The idea of an equity partner never appealed to me anyway, so my wife and I are content to do what we can do ourselves.
I always had the feeling that most of the people who rushed to the front of the room at those seminars to buy the kit, probably never did much in real estate. I'd exclude Carleton Sheets from this because I think his books and tapes were reasonably priced and I don't think he over hyped the mansions and sports cars theme like so many of them did. I think if people wanted it enough, the information was out there for free and people paying for the kit were looking for an easy way. Disappointed, no doubt, when they found out that if money came easy, everybody would be billionaires
and the money would be worthless.
The only thing I could say is the same about any two deals that we've done is that all the sellers were more motivated to sell than we were to buy and most of the properties were in some form or level of distress. Other than that, you just have to be prepared to act when an opportunity pops up, usually from somewhere unexpected. The ones that got away were the ones we weren't prepared for and couldn't act fast enough.
I never agreed with the seminar hustlers when they said that low interest/high purchase price was the same as high interest/low purchase price as long as the payment was the same. Those people get real quiet after a tough period in the market. If cash flow gets tight, people with no equity get hit the hardest. Cash flow being equal, I'll take a lower purchase price every time, as long as I can pay it off early if I want.
I'm not saying there's anything wrong with studying, but it's been 24 years, dude. Can you think of a property that you could have bought 24 years ago that is worth less today? Not to mention that a 30 year mortgage would be paid off in 6 more years, even if it was worth less. The cheapest property I ever bought was 2 lots in Ohio in 2011 for $1000. There was a $1500 buyer's premium, so I was in for $2500. (It cost the bank almost $5000 to sell it to me!) I found a buyer on craigslist who offered me $5000 down and 8% interest on another $5000 and he paid me off in about 18 months. Flipping vacant land.....you never know what the next opportunity is going to be, but you can keep studying after you buy a property or two. Good luck, man!
Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
4y
@Robert Jordan 2 of my last 3 deals I bought (for rentals) where subject to the existing mortgage. My costs where the closing costs, one I gave the seller $3k for a security deposit to move to.
Now: not mentioned in the no money down ads, books, are the $5k to $10k I spent marketing for the stressed person (following a comment above). Same idea, Market to low equity, VA fha, low years owned but stress, late on payments, BK, liens, divorce.
Join local Reias for local creative deal experts.
Search YouTube for subject to, lease option trainer's. Nuy their programs. I did, all are good. Ie Joe McCall etc.
I've been studying Real Estate since 1998. I had my first license in PA then, working through Weikert Realtors. We were remodeling Multi Units on Drexel University Campus. I started listening to the Sheets tapes. I thought No Money was the ticket, since all my funds were tied in student loan repayment. I have since been awakened to the fact that,
1. If you are just starting out, no one will partner with you or trust you with their money.
2. If you want a seller to finance any part of the deal, you will need a good sized DP, if the property is even worth purchasing. Many times, after the repair, depending on the area a profit is nullified.
3. Most realtors don't want to talk unless you are pre-qualified.
4. People say find a good deal and the money is easy. I think with the money, you can generally make the deal.
This is coming from a guy still trying to break the ice and get into the game.
Any thoughts.?
My thought on each of your points
1. It is possible to find partners if you are just starting, by figuring out what do can you bring to the table in a partnership. That's the bottom line
2. Yes, you'll most likely need a large down payment to make a seller finance deal work, but back to point one- If you find a property with a great profit margin you should then be able to attract/partner with someone who has money for the Down Payment. I again go back to the first bullet. Can you bring good deals to the table that someone may be willing to partner with you on.
3. As a realtor I talk to people who aren't pre-qualified every day. What I won't do is entertain going to see properties or making offers for people until they show me they have the ability to close.
4. Regarding "People say find a good deal and the money is easy. " We believe- Build trusting relationships in your business. Then when you find a good deal you'll be in a position to share it with those in your network.
Handyman · Moretown, VT · Member since 2016 · 26 posts · 6 votes
4y
To be clear, this is by no means an attempt to gain a partnership using sweat equity. Also, I do know with the right circumstances "Low/No" can work. I also know for a fact that many Realtors
look at Investors or people who do not want to pay a grossly inflated price as schemers.
@Nathan Gesner I greatly appreciate your valuable feedback.
@Steve Vaughan I think your comment about "focus in the type of seller" is a key point. I also like where you mention the initial standards for a DP being 10%.
@Mike Dymski I completely agree conventional is one way to go. Where I currently reside, the average price for a home is about 325. Of course there is nothing on the market below 700. Let's just say I save for a 500k place @ 60k/yr. That could be a good 10 years. I have to get over my resentment of our financial institutions.
@Tim Deimer Well I did some rehabs. Got a license to learn more about inventory and selling. I tried to work with a Realtor. I then discovered that "Low and No" meant 3.5-6% Realtor fees., if you use a Realtor+Closing costs (~10-12%)+-... legwork and due diligence ( with anything omitted or repeated, please excuse. This was a game I wasn't ready to play. So I moved to Montana and started Fly fishing instead. I kept getting licenses to study the market. I thought a license would have the deals filtered to me. All along I kept hearing "find the deal and the money is easy".
I tried a few "subject to" purchases in Montana because it was my understanding that you could just assume the seller's Mortgage. I cannot speak for every municipality, but in Whitefish Montana, where I lived for 10 years, this did not work. Or, there was user error.
I go a CA license and didn't really use it. I lived there for 3 years. I lived on Oahu for 3 years. I then moved to central vermont. I got a license here and tried to sell in the mad river before this big boom. First, I couldn't get anyone to hire me. Second, I was told people don't do what you are trying to do here. I have gone to Investment meetings an hour away. Nothing like that around here. I have been looking for specific properties all this time. Although I know from my research that there are lots of opportunities.
I got one owner who would seller fi his place up here. It needed a ton of work. I got a bud to do all the work. The house is now renovated. The owner turned out to be his wife and they decided to keep the property. They put over 100k into the property, it could be at 240 now.
Anyway, thanks for your input. And I do own two .3ac parcels of land up here by a small lake.
@Curt Smith Thanks for your valuable feedback. I especially like your comment about the time and cost of doing business, which is rarely discussed. I have had positive feedback with a few lease option opportunities, I need to learn more about effectively implementing the exit.
Rental Property Investor · Member since 2021 · 29 posts · 34 votes
4y
You've done a lot more than you let on in your first post. My long-winded point was anything is possible, but anything that's easy is only easy because it's something we love to do. My favorite market was 2008 - 2014 and we haven't bought anything since 2016. I can't get interested in the current "sealed-bid sale" environment. At my peak, I was sitting on the couch with my feet up and a computer on my lap so long that I needed knee braces! Many people would have considered it torture but it was a compulsion for me. If you're doing what you like and can afford to live your lifestyle, you're doing better than most.
BTW, I thought my knee problem was just age related until the market got away from me and I had to get up and do something else! Now they're fine.
I've been studying Real Estate since 1998. I had my first license in PA then, working through Weikert Realtors. We were remodeling Multi Units on Drexel University Campus. I started listening to the Sheets tapes. I thought No Money was the ticket, since all my funds were tied in student loan repayment. I have since been awakened to the fact that,
1. If you are just starting out, no one will partner with you or trust you with their money.
2. If you want a seller to finance any part of the deal, you will need a good sized DP, if the property is even worth purchasing. Many times, after the repair, depending on the area a profit is nullified.
3. Most realtors don't want to talk unless you are pre-qualified.
4. People say find a good deal and the money is easy. I think with the money, you can generally make the deal.
This is coming from a guy still trying to break the ice and get into the game.
Any thoughts.?
My thought on each of your points
1. It is possible to find partners if you are just starting, by figuring out what do can you bring to the table in a partnership. That's the bottom line
2. Yes, you'll most likely need a large down payment to make a seller finance deal work, but back to point one- If you find a property with a great profit margin you should then be able to attract/partner with someone who has money for the Down Payment. I again go back to the first bullet. Can you bring good deals to the table that someone may be willing to partner with you on.
3. As a realtor I talk to people who aren't pre-qualified every day. What I won't do is entertain going to see properties or making offers for people until they show me they have the ability to close.
@Crystal Smith
Thank you for your response. I especially like where you mention not showing properties until the buyer has been prequalified or approved.
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
4y
I think you passed over the biggest point in all the comments: Its not the type of real estate, its the type of SELLER.
I market to people who are behind on their property taxes, about to get foreclosed, rougher looking houses, AND I tell everyone that I come into contact with that I am looking for distressed people. I can buy their home and help them get on their feet financially.
THOSE are the people who will allow you to do a Sub-to or seller financing with little or no down. It is tough to find those people, but when you tell 100 people every month what you are looking for, people start calling YOU. Be nice, friendly and try to help people get to a better place in life. When you help others, it comes back to you. I 100% guarantee or your money back!!
I've been studying Real Estate since 1998. I had my first license in PA then, working through Weikert Realtors. We were remodeling Multi Units on Drexel University Campus. I started listening to the Sheets tapes. I thought No Money was the ticket, since all my funds were tied in student loan repayment. I have since been awakened to the fact that,
1. If you are just starting out, no one will partner with you or trust you with their money.
2. If you want a seller to finance any part of the deal, you will need a good sized DP, if the property is even worth purchasing. Many times, after the repair, depending on the area a profit is nullified.
3. Most realtors don't want to talk unless you are pre-qualified.
4. People say find a good deal and the money is easy. I think with the money, you can generally make the deal.
This is coming from a guy still trying to break the ice and get into the game.
Any thoughts.?
agree with number 4.. real estate generally speaking is a capital intense business at least if you want to own the assets.. best leverage is being an agent. make commissions with out any monitary risk or huge amounts of capital or credit.
Sheets got me I interested in RE as well. He had examples of buyers leaving the closing table with a check. Realtors taking a note for their commissions (yeah, right), partnering and or selling off part of the property or timber simultaneously etc to bring down your out of pocket.
If most people spent as much time and effort locking up a good seller as they do figuring how to not put anything into it, they'd be better off.
I've received every dollar + I've ever put into real estate, but it took time. Sometimes 10 years.
The low and no money folks should focus on types of sellers vs types of real estate.
All of my lower money down seller-financed sellers were older absentee owners looking to retire or move in a different direction that owned a long time and were facing significant tax burdens if they sold conventionally.
My avg DP was 10%. I can do less now that I have good references and a reputation, but 10% down was standard.
I'm also buying an office building with seller financing in an LLC. He needs 20% ish down, but only because there is an underlying loan. I can equity share with new members and do this with none of my own $ if I want to, but I need a certain type of person.
Find the people, not the property...
Or buy a primary with little down via VA, FHA or USDA or Homepath loan products. Simple if you've been diligent saving a few grand and managing credit.
taking my commissions on notes during that great Carter administration and their 15 to 20% interest rates are what feed my family.. I would only work on owner finance deals split the down payment with the owner take my other half on a note it actually worked pretty well i had a nice passive income built up after a year or so . so many agents would just bow their back up if they could not get all their commish at closing they would not do the deal well those folks starved. you have to do what you need to do and create win wins
