A no money down real estate deal example
When I started out in real estate I had no money to buy real estate and enough money to buy a list of motivated sellers. I had to think creatively to do a deal. I took one of those Rich Dad real estate training courses and it taught that I could pretty much get an interest in a piece of property if I got in the middle of the buyer and seller by putting a deal together - by finding a deal for a real estate buyer or investor. I didn’t have the 20% down payment for a property so the downpayment had to come from the investor and the deal or property had to cash flow for it to be a good enough deal that the investor would be interested in. I found a motivated seller that was in foreclosure that wanted to stay in their house, put together a profitable cash-flowing rent-to-own contract so that they could stay in their house and took 50% share in the cashflow every month for putting the deal together. So, I had no leverage - no debt - and I owned a stake in the profits from the property. The cashflow.
Most people think of taking out debt when they talk about no money down real estate
It doesn’t have to be that risky. Especially to start out with.
Most professional, high level, well educated investors, REITS and hedge funds would argue that the use of leverage and debt increases profits. But not every investor wants to nor every investor should become highly leveraged if they don’t have their life in order to handle that kind of financial risk or have a team in place to become truly expert industry leader playing in the best markets all of the time. Think of my creative example mentioned above - no leverage.
You can also make money in real estate with no money down without owning an interest in the property like real estate wholesaling, being a real estate agent or broker, or consultant.
Investors that want to get no money down real estate deals want to get rich quick
Leverage accelerates how quickly you get rich; This is risky. Typically, if you have no money you have no experience, low skill or you would have done it already and made your money. By doing a no money down deal you can ideally use your creativity to do a truly no money down deal and without taking out any leverage. Take a look at this blog post. Most strategies that Mark outlines in his headings give the impression and require you to take out leverage. Why not try a strategy like mentioned at the start of this post when you are starting out and have little experience and proven skill.
Does it mean that everyone is poor that wants to do no money down real estate?
From my phone conversations with real estate consultants and agents over the past few years I got the impression that there are a lot of really poor people in this industry trying to do their first deal because of low barriers of entry to the industry. After the 2008 housing crisis and how there are 20% vacancies in some of the hottest US markets right now it leads me to a possible conclusion that people are poor and it’s tough out there.
How are you going to compete versus the largest players and REITs if you aren’t finding deals that are good enough to be done? You have to do free strategies and this includes low-cost online techniques like JVing and bird-dogging like mentioned above. This includes a lot of networking, which people for some reason like David here tend to complain about doing - even though it’s the key to finding the best deals on the internet in any hot market.
Or is this just an all-time real estate trend that to be successful in real estate you need to be leveraged - take out debt - and that no money down real estate really means that you are going to be paying loans? What are your thoughts?
Share this post and leave your thoughts below.
Like Access The Flock on Facebook: https://www.facebook.com/AccessTheFlock
Follow Access The Flock on Twitter: https://twitter.com/AccessTheFlock
Subscribe to Access The Flock's YouTUBE channel: https://www.youtube.com/channel/UCe9RexFmsbI0IoVqSGoGToQ
Join Access The Flock Real Estate Marketplace LinkedIn Group: https://www.linkedin.com/groups/7055563
Connect with me on LinkedIn: LinkedIn Personal