125 Loan / Just getting started

Quote from: propertymanager on October 11, 2006, 05:48:49 PM

Allagash,

Here are some methods to buy properties without any of your own money:

1. Buy at a BIG discount and finance 100% of the purchase price. Nothing flashy here. The bank will want you to have some equity in the deal (usually about 30% in my experience). You can either put down a cash deposit or buy below 70% of the appraised value to get the 30% equity. With 30% equity, many small local banks will give you 100% of the money to buy the property.

2. Buy Subject To the existing financing. Many desperate sellers just want to get out! In a subject to deal, they deed you the house and you make the payments for them. I've done several of these. Again, no money from you.

3. Buy on a Lease Option. Many desperate sellers just want to get out! In a Lease Option, you rent the property with an option to buy it. CAUTION - you do not get the deed until you buy the property so you MUST be able to trust the seller. I have done lease options when I wanted to control an apartment building for a short time before I get a loan for it. If the seller is desperate (like a stressed out landlord), then you can do this without putting down a significant option premium. You do need to give the seller something for an option premium, so I usually give them $10. Not totally "no money down", but ten bucks isn't much!

4. Buy with seller financing. Many desperate sellers just want to get out! In these deals, the seller simply finances the deal. You get the deed up front and the seller gets a note. For this to happen, the seller needs to own the property outright.

Beem,

Here are some ways to find properties at BIG discounts. Again, I'm not very flashy and don't do much of that guru nonsense.

1. Find a hungry realtor. When I first started, I found a 20 year old girl that had just gotten her real estate license. She was hungry and willing to work like a dog to find deals. I told her what I was looking for and she calls me every time she finds one. I have bought several deals through her and am still using her as a source of deals today. NO, contrary to that guru nonsense, I don't mind paying her a commission. In fact, I often pay her money beyond her commission when she finds me a great deal. I don't care how much anyone else makes. I only care how much I make.

2. Find desperate landlords. I've bought several apartment buildings from desperate landlords. A good place to find them is at your local REIA. Many people become landlords believing the guru stupidity that landlording is easy. After they have a few nightmare tenants and spend every night wide awake, they'll do ANYTHING to stop the pain! Some of these people will even bring their own cash to the closing table to get rid of their headache.

3. Sheriff sales (foreclosure sales) can be excellent sources of properties at big profits. I bought a 3 br, 2 ba with 3 parcels and two 2 car garages for $39,000. The property appraised at $102,000 and needed absolutely no repairs. These sales require a lot of knowledge and a little luck (since you usually can not see the inside of the house before you buy it). I do not recommend these for new investors.

4. Put a small ad in the paper. Here's what my ad says: Facing foreclosure? Need Cash Quickly. We buy houses. Call Mike at XXX-XXXX. I've gotten a couple of excellent deals from this ad.

5. Network with wholesalers at your REIA. Other REIA members often have more deals than they can do. They'll pass their excess deals to you for a small fee (sometimes for free).

6. REOs can also be an excellent source of cheap deals. You need money or credit to do these deals. Additionally, banks usually do not accept any contingencies. Banks are by far the worst sellers that you'll ever deal with. They lie. They will shop your offer. They will hold your offer indefinitely, ETC. However, you can get some excellent deals if you are persistent and know the drill.

Good Luck,

Mike

Thanks. This is great advice. I have read 11 rei books and none were as cut and dry as this post. Thanks