BiggerPockets Podcast 106: How to Do 100+ Deals Without a Bank (While Raising Unlimited Funds) with Mike Sumsky

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Is it possible to build a large real estate business without the use of banks? Our guest today, Mike Sumsky, shows us that it’s not only possible – but can be incredibly beneficial! Mike has done well over 100 deals in the past several years using a variety of creative finance methods and shows you how you can do the same.

Listen for great tips on obtaining private money, finding deals by knocking on doors, and other innovative strategies for building your real estate business. Whether you want to overcome a lack of funding or you just want to explore creative ways to raise capital, this is an episode you don’t want to miss!

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logo_c04f5f61-f5d8-4333-a2b7-a12a07d8bfd3_mediumWe just wanted to give a shout out to our podcast sponsor on today’s show: YellowLetters is a full service marketing company that helps hundreds of BiggerPockets members find more deals and make more money.

In This Show We Cover:

  • Mike’s thoughts on creative real estate investing
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  • How he got his first properties
  • Investing while losing a job
  • The beauty of taking action without knowing everything yet
  • How to get your first deal from knocking on doors
  • The anatomy of a short sale
  • Tips on applying for a bank loan
  • How to learn while doing
  • Closing on a house with less than 5 thousand dollars
  • What “Subject To” type deals are
  • Everything you need to know about private money
  • How to become “the prize” in each transaction
  • Plus MUCH more!

Links From the Show:

Books Mentioned in the Show

Connect with Mike

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners — without the non-stop pitch prevalent around the industry.

With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!


  1. Elizabeth Blazina

    Hi Josh, Brandon, and Mike, Great Podcast!
    I must make a disclaimer that I am a bit biased as I use to attend Mikes REAPs meetings in Kitsap . He was a mentor and instrumental in me getting my first duplex.. and yes it cash flows very hansomely. Can’t Thank you enough Mike for all you do in the Real Estate Community.
    So as you say we are always learning. and there was one aspect of the podcast that I could’nt get my head around. I was wondering if you could explain how a seller finance deal that is used for a private money loan is structured. I was unsure how you are accessing the funds on a seller finance model. Do you use the property as collateral?
    Thanks and keep up the Great Work guys!

    • Mike Sumsky

      Hi Liz, thanks for the kind words!! Just to clarify your question, are you wanting to know how to do a seller financed deal that still requires a down payment/rehab costs (blend of seller financing and private money?). If so, there are a couple ways to do that. Obviously, the important thing is to make sure you’re providing adequate collateral for your private money partner. If you give a large down payment to a seller, with the balance carried on a note, you can have the seller subordinate their note and mortgage so your private lender is in first position. If you’re not paying much of a down payment or you can only do the deal with your seller in first position, you have some options, such as doing an equity split with your money partner on title and/or cross-collateralize with another property that you own to provide proper security. In either case, you should still make sure you have an adequate equity buffer in the property to protect all parties. I don’t do 2nd mortgages for lenders.

  2. Elizabeth Blazina

    Hi Ariell,

    I actually financed the property with a bank. I had the down payment and the credit, so I basically saw this as a good strategy. So essentially out of pocket was 30K. The duplex rented for $ 1480 with my mortgage coming to 525.(PITI). at a interest rate of 4.25%. I have since raised the rents to $1540 to reflect market rents ( although that is actually still slightly below).

    Honestly I could have done a few things. But at the time it was a bit out of my comfort zone. I am learning 🙂
    1) I could have found a private money lender to fund the whole thing and share the equity and cashflow. LIke Mike did.
    2) I could have found someone with good credit and down payment and done the same( equity share and cashflow) only with a mortgage.
    3) I could have had the seller finance the property. A lot of times a landlord is really happy to not have to deal with tenants and still get a check… although this is smaller than what they would have been getting from rent.

    There really is a lot of ways to purchase a property. You just need to look at what you have in resources . By resources I mean what you can bring to the table e.g. private lenders, private partners, cash , management skills, finding the property . etc.., what the seller can bring to the table( eg. equity, time.) and then orchestrate a deal on all those factors. This is really the gem that I learned from mentoring with Mike. Overall it should be a win win for both.
    I hope that helps some.
    Good Luck on that duplex!

  3. Pyrrha Rivers

    I absolutely loved this podcast and I have listened to them all, some multiple times as I’m sure I’ll do with this one. So full of replicable steps!!
    Thank you so much for the lessons!!!

    The one thing I would not implement is the selection of a 15 year mortgage over a 30 year. Through my very limited experience, I prefer the 30 year term for the peace of mind of having a lower monthly payment even if I can afford to make a larger one. I can make it a 15 year or shorter on my own.
    I implemented this strategy to pay off my first mortgage and it went very fast, I found it very easy and empowering to do.
    This is how I did it:
    1. I set the regular payment on automatic through my bank’s bill pay
    2. started making an additional “principal only” payment of $20. Soon I doubled it to $40 and before long I was making an additional $100 payment each and every month.
    3. Eventually I was making my “principal only” payment larger than the required monthly payment and before long, the satisfaction of mortgage letter arrived.
    I saved a ton on interest but did it on my own terms and without the stress of a required higher monthly payment.
    If things are tough one month or two, you can make the minimum payment without consequence but once you commit to this method, it is so exciting to see that balance dwindle that soon you get back to the extra principal payments.

    • Mike Sumsky

      That’s a great way to have the best of both worlds Pyrrha! Sounds like it’s worked out really well for you. I agree that you shouldn’t get into a 15-year loan unless you still can maintain a good, positive cashflow to cover the payment.

    • Mike Sumsky

      Walter, nowadays I get most of my deals from direct mail and referrals. Vacant properties from driving for dollars is the best list I mail to. I also contact every bandit sign I see and do what I can to be the first person they call when they get a deal under contract or even a motivated lead. I try to help others as much as I can, and what I’ve found is that instead of creating competition, it creates JV partners.

  4. Omi C.

    Superb show Mike, Josh, & Brandon! Love the bit at the end not getting lost in analysis paralysis. It took a leap of faith in my numbers and facts for me to get started recently.

    I have a question for you, as I ponder my future investing / funding strategies.

    I’ve funded my first purchase using a conventional loan, at a low rate fixed for 30 years. So – in theory – I can do 9 (?) more of these. If rates stay below say 5-6% for the next few years, and I maintain my high credit score, whats the advantage of seeking out private funding when I could get better rates at a bank? Even at 7% from a private lender – which is a great rate for private money – thats still a higher cost for me than going to a bank.

    Thanks again.

    • Mike Sumsky

      Having access to private money will allow you to close quickly and buy houses that you won’t be able to purchase with conventional financing (because of repairs needed, hoops to jump through etc). In your situation, I would recommend using a combination of both. Find good private money that you can access quickly to buy and remodel the property. Then you can refinance into a traditional loan at a lower interest rate if you intend to buy and hold. That will free up the private money for future deals.

  5. James Stevens

    That was a great show! Thanks Mike for all the great tips on finding and using private money. They really opened my eyes to a few different possibilities, as I’m currently seeking funding for a new project. Hopefully, I will be able to put some of those ideas into action this week and be able to accomplish my goals a little easier.

  6. Barrett Dunigan


    Enjoyed the Podcast. How are you structuring your private loans that are not a 50/50 split on net income? You said you were getting rates between 6%-7%, but what are the terms? Interest only for a set period (say 5-7 years) with balloon, or do you look for a more traditional term (15 or 30yr fixed rate).


    • Mike Sumsky

      Hi Barrett, sorry for the late reply. Almost all of my private money loans are interest-only with a 7-10 year minimum balloon payment, although I do have some that are amortized (even full, 30 year amortizations with no balloon). I don’t like to have anything shorter than a 3 year balloon payment, even with homes that I plan to fix and flip. It’s always good to have a plan B if the market shifts, and short balloon periods leave you with fewer options.

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