If you’ve ever watched TV after 11:30 p.m., you’ve seen people talking about courses on buying real estate with no money down. They show vacation paradises, beautiful girls, luxurious cars and big mansions. We promise you all this if you buy his course to earn a million with nothing! If you want, you can spend “just three payments of $99.99” to check out this exciting area… OR… I’ll tell you for FREE!
One thing I must mention first, however, is that ANY information, combined with ANY action, produces NO results. If I went to your house and showed you everything in person and answered all your questions, and then you did NOTHING… it was a waste of time. Yours and mine!! On the other hand, if you combine the information with hard work, perseverance, and most of all GUTS, you will succeed, whether you buy the courses, read the free books at the library, or get the information from me, right? here!
I mentioned GUTS because there is a price to pay for everything. If you had a million dollars, you could buy an apartment building with little difficulty. Just pick one that you liked, performed well, and passed a building inspection.
If you do NOT have a million dollars, what are you going to do? Well, get ready for some hard work, looking for the right deal. Prepare to have a lot of offers turned down and maybe even laughed at. Get ready to hear a pompous real estate agent tell you (as one did to me): “Son, I’ve been in the real estate business for thirty years and let me tell you, there’s no such thing as a no down payment deal.” .” Prepare to work on a deal and spend time on it only for it to collapse.
You’re going to put in your down payment in the form of “brain sweat equity”. You will pay off by gaining more knowledge than others in creative real estate, and by searching hard to find MOTIVATED sellers, those who desperately want to get rid of their property and are therefore willing to help you. outside. Above all, you are going to pay by enduring the inevitable “start-up problems” that ANY business or company has. If it was easy to do, then everyone would be doing it, and there would be no property left! It’s this difficulty that makes it EASY, once you know what you’re doing!
OK, here we go, but first you need to know ONE thing: IN REAL ESTATE EVERYTHING IS NEGOTIABLE! Let me say it again, because it is the lynchpin of the way creative real estate works: in real estate EVERYTHING is negotiable!
What does that mean? Are there limits? NO!! Can you get someone to carry a 25 year sales agreement with little to no down payment and no credit check? YEAH!! Are there ten ads in the newspaper offering such a deal, or just one? Probably none! What does that mean? EVERYTHING is negotiable! If you find a motivated seller, one who pays every month to own that property, one who doesn’t have the skills to fix it, one who has moved out of town or out of the country, you COULD do it! Note that I didn’t say I will, I just MIGHT!
Think about yourself when you had a car that you wanted to get rid of, because it was a piece of junk. If someone came up to you and asked “how much?” you would say “$1000, firm.” But deep down you knew that you just wanted to get rid of the headache! And if you’ve ever had to wait a month or two without anyone buying your car, all of a sudden you weren’t so firm on the price! And if the alternator had to be replaced before the car could run, pretty soon I wanted it OUT of his hands! NOW, you are ready to accept monthly payments, maybe have something as collateral, etc. You just want it to GO!
It’s the same with real estate! They go from being our pride and joy to being a ballast around our neck, then we are ready to do WHATEVER it takes to get rid of it!
These people are not going to jump around and say “I’m willing to take a no down payment settlement for my property”! They’ll be depressed, just like the guy with a jalopy in his backyard, sitting there for months. They’re going to take a bit of convincing, but if you find the “DON’T”s, the hard part is done! Then he makes offers, looking closely at each property to see if he can give it a try (that’s another report!) If he can get the property, sometimes he doesn’t want it either! Then it’s just a matter of making offers, either in person or through a real estate agent, until you find someone who is
ready to deal The first time is the most difficult, because no matter how much I tell you (or those on TV) that it CAN be done, you’re going to think “not for me, not here in __________, not even with my areas of law and zoning regulations, not with my personality, not with my brain, etc.”
Do not believe it! Look at all the people in TV commercials, of all shapes and types, they have ONE thing in common: they went out and DID IT!
ALL IT TAKES IS COURAGE AND PERSEVERANCE!!
Here is the “stream of consciousness” of ideas on how to buy with a $000.00 down payment, but keep in mind all the time that IN REAL ESTATE EVERYTHING IS NEGOTIABLE!
1) The easiest way to buy with no money down is to have the seller carry out a sales agreement. Monthly payments for 25 years are possible if the seller doesn’t need the money and can be convinced to get his 6.7.8% guaranteed yield on his house instead of buying a 4% bond.
2) If you have good credit and don’t want to put money in a property, try a first mortgage, the seller has a great second mortgage for the rest. The seller gets, say, 75%, and takes 25%.
3) Again with good credit, try smallest second first and a personal line of credit for the rest, especially if the gap is only $10-15,000. This can even work for low-priced properties where the first mortgage is combined with a PLC for the rest. Be smart enough to go to another bank for PLC and tell them you are going to make an investment with money. Don’t tell ANY bank you’re doing a no down payment deal!
4) Payment by installment: the seller wants a $5,000 down payment, for example. How about $400 per month for a year? He’s still paying for it, but in time, maybe the property will generate enough extra money to pay for this!
5) Back Taxes – I’ve made deals where I’ve taken care of any back taxes owed – you can pay them at your own pace, within reason!
6) Free Rent – I’ve done deals where the seller had office space in the building and took 2 years of free rent as a down payment. You can also work for multifamily.
7) At closing, there are adjustments for that month’s rent (close on the 2nd or 3rd to maximize this) and for damage deposits, taxes due for the seller’s ownership period, utility bills due, etc. These can add up to a huge amount!
8) Since the bank begins mortgage payments one month after closing, simply paying a 2-week interest adjustment allows you to use the first month’s rent and apply the second month’s rent toward the mortgage payment.
9) Borrow on insurance policies, stocks, bonds, mutual funds, etc. If you allow the bank to insure the collateral, they will be very accommodating.
10) Accumulate your Visa, Mastercard and American Express cards. A bit crazy, but I’m assuming it’s a great investment!
11) Borrow from friends, relatives, boss (vacation pay?) Maybe even make them partners!
12) Partners are a surefire way to get accepted for large bank loans, create enough down payments, etc. Always look for people who are interested in this area and ask them what prevents them from buying investment property. If it’s time, experience, etc., then you have a fit! The only thing holding you back is money, and you’ve found this great property, haven’t you?
13) Syndicate a group of people, say 9 investors and you get the last tenth for putting the project together, they will provide the financial strength for the loan, and maybe even down payments! Anything is possible, remember? It’s a lot of work to find these people, but VERY lucrative! Start with dentists and doctors, lawyers, everyone you deal with!
14) Rent to Own – Maybe you make payments for 3 years and then you’ve accrued the down payment, in the meantime the property can go up in value, rents go up, etc.
15) Option to Purchase – Seller keeps title and earns all proceeds. You simply pay a sum for the right (make it REALLY legal!) to buy the property at a certain sum in X years. There could be an exchange for this option, for example, exchanging an item or service for the option.
16) Let’s make exchanging an item or service for a down payment your own idea!
17) Foreclosed Property: Maybe just before you go into foreclosure, you offer to keep the payments and give the seller SOMETHING, EVER, in exchange for their principal. (In a short time you will get nothing!) Lots of work, lots of books and ad services available.
18) Repair damaged property–work agreement with bank–example: as is worth $75,000, with clean and fix worth 100,000–bank offers 75,000 mortgage based on future value–you have to fix- – similar to sweat equity.
19) Leasing property (ie office building) from landlord and subletting it to tenants – Must be very legal and usually requires a lot of rental effort.
20) Pay someone to sign a loan
21) Have the real estate agent carry his commission as a note; they HATE this, but if necessary…
22) Balloon Payment: No Down Payment, Balance Due in Three Years
23) Private Money From Mortgage Brokers – Ask Them About It! High interest rate, but…
24) Refinance the property either before taking it over or after
25) Find a partner who will take a negative cash flow payoff and you manage the property; this can even work with the purchase of your personal residence. The investor is happy with $200 per month of negative cash flow in exchange for taking care of the property, always a tenant (you) and an investor split the proceeds when selling.
That’s going to be enough to get some gears turning in your head. The most important part is to keep trying and be creative. Combining parts of one idea and another, and always probing what the seller wants will lead you to solutions. Always look for ways to make both of you happy. Everyone wants all the cash, right now, not everyone is getting it! Think about the junk car in the backyard and find ways to HELP the other person – they want to sell!
Above all, keep looking! It is not a failure on your part if someone clings to the hope of getting a certain price or certain conditions. If they can, great! If not, check back in a few months. Many properties are still there and with a MUCH more receptive seller after they have the property “sitting in their backyard, rusty” (or racking up negative cash flow and property management and maintenance headaches). Try and try again!
Check online for new information and more opportunities, network with other investors, ads can be used to point out what you are looking to find, partners sought etc. Go to your public library for more information on real estate and business. Keep your mind working and searching, keep looking for properties and more information, an idea can be worth a fortune to you, attend seminars when they come to your town, and the total adds up to “Eureka!” she yelled into the night.
Obviously, buying with a low down payment is much easier than buying with no down payment at all, so be sure to save your money to make it easier for you. Even a deal with no money down may require cash for legal fees, closing costs, etc.
Best of luck!
