Can I Really Buy Property With No Money Down Or Is Investing Only For The Wealthy?
I am ready to start my real estate investing career but I dont know where to begin. In the near future I would like to buy my first investment property but I dont have much money. What is the best way to get my foot in the door? I have been inspired by the Carelton Sheets program although I dont know how it works because I havent recieved it yet. Can I really buy property with no money down or is investing only for those who already have a wealth of money? Is there much money in becoming a real estate agent? 
In our opinion REI (Real estate investing) is NOT for everyone. Wealthy or poor, the patience, determination, and steady approach needed to succeed is not for all. So do yourself a favor and study this business from another investor for a level set. Real estate is a wonderful tool to grow your personal net worth.
Many investors have purchased property with very little money and strong credit.
Eric & Rosa
[addsig]
It all depends on your temperment. If REI is something you want to do and be successful at it, then you are the only one that can stop you!! Find a mentor that will show you the ropes, read, read, and read some more, ask lots of questions, and start making offers....
If you want it, go get it!!!
Prosperous investing,
td
I bought my first property with no money down. I ended up buying a duplex. You can do it, its just knowing how to leverage the situation you are in. Great credit helps. You may want to start with getting your credit score as high as possible. This will help the banks/ lending places accept you as credible. Next you need to find someone who really wants to sell. No money down is very possible, however its much easier to buy with very little money down. (Say 5%)
My 2cents worth.
[addsig]
You can control properties with zero money down. Sandwich lease option is a great way to start with $0.
There are also ways to structure loans so that you can get 100% investor financing (not hard money) with $0 out of pocket. It can be done!
Having no money to invest is not as much of a block as it might first appear.
Pounding pavement, calling ads, viewing properties, making offeres all can be done with little cash.
Having little money normally causes problems with one's attitude, with the ability to handle the risks if something you own needs unexpected repairs, goes vacant or the tenant skips town.
John
If your educated and or experienced it is doable. I helped structure a deal a couple of months ago which required $200 out of pocket and at closing the buyer received $7500, he is also cash positive $200 a month.
My brother in law has bought almost 2 million in the last several years NMD and is only 24 (sheesh!)
I am 40 and a little more careful, I have "some" money and so don't have to work quite as hard.
That said, finding the right deal can be frustrating at times. When I am ready the deal isn't. My wife currently says "no deals" this month we are going to europe for 3 weeks
I'll share my story just so you know that it really can be done.
It was my personal goal when getting started in REI to not use any of our personal $$. I must admit that I have a degree in RE, but I also read and re-read CS's info and it really helped me get started - - especially with specifics on financing and making offers. It did provide a lot of info about the basics as well as motivation to get me moving.
So, after months of looking, watching, networking, and running numbers on any interesting property, I finally found one that would work. The key for me on this deal turned out to be the seller. He was willing to sell on contract. After negotiation, I got 3 years at 0%, followed by 4 yrs at 3% with a balloon due at year 7. For the down payment, I got an unsecured loan from the bank and used a cash advance on my new business credit card. The income from the property fully covers all debt payments with 25% reserve. Plus, there is room for growth (aka increased CF) in the building. Also, there is no prepayment penalty so I am currently over-paying to bring the baloon balance down and increase my equity.
I did all of this with no money out of my pocket (I did charge some of the upfront fees, but was able to pay that off with money obtained at closing). And it was not just a single family house. It was a 13 unit mixed-use quarter block of downtown - great location, right on Main Street. Heck, it's getting a new paint job as I write this (also negotiated - - and a new roof for one of the buildings, as I knew these things needed to be done and that type of big-ticket item would hurt when I was just starting.) Additionally, I didn't find it using skillful, pre-MLS methods. It had been listed for almost two years, I saw it in the book.
Anyway, for me it was just a matter of being ready. Certainly, there is risk involved, but hopefully lots and lots and lots of homework will help minimize that risk and make you more aware of what you're getting into. So far, for me, it's been great. I am learning so much; the seller has kinda taken me under his wing and has been extremely helpful in all matters (of course, he doesn't want it back!) from the building to financing other investments. The building had been in his family for almost 80 years and at 62, he wanted out. Additionally, it turns out he's Chairman of the Board of the largest bank in town! That certainly can't hurt me for future deals!
I know this was long, but I just wanted to let those of you who are just getting started know that it can be done. You just need to start digging in.
Good luck,
Susan
[ Edited by sefrede on Date 03/09/2004 ]
To answer your question on being a real estate agent. No,the average agent makes $7,000.00 per year according to the national association of realtors. As far as no money down deals it is doable. You have to be creative in handling financing and negotiations. Always ask for owner financing. Learn to think outside the box.
Sigh.....How many times has this been asked. Check out this poll:
http://www.thecreativeinvestor.com/Survey35.html
As of the time of this posting, 25% of the TCI investors didn't put any money down on their last deal. Another 26% put down less than $5000, and only 20% put down more than $10,000.
Yep you can do it, and people here are doing it every day. That's why it's called creative investing.
I'm a college student and not very experienced in this but I did come across a website run by another RE investor, Dave Whisnant. He claimed the Carlton Sheets method was from the 70's, outdated, and would not work in the real world today. Any truth?
Susan:
Good show. I can see the headlines now So. IN gal makes good. Sort of "Hoosiers" on the river.
Edyta:
Carleton is from the 60's . I think Dave Whisnant is from the 50's. He''s more talk than teach.
SammyVegas,
Thanks!
Do you really know where Madison is?? I'm impressed, I didn't even know where it was until we moved here 3 years ago! Although there was a movie called "Madison" made a couple years ago (about hydroplane racing and the one year we won) which apparently is making the previews for "The Passion" - - Jim Cavezal (sp?) was in it before he made it big.
Again, wow. You know of Madison. . . . . makes me feel not so in-the-middle-of-nowhere. It is a beautiful little town, just not well known - or so I thought!
My first RE deal a partner put up all the money and we split the profits 50/50. My second deal I had a simultaneous closing, I did have a large amount of earnest money at risk though.
Over the years I have had +100% bank financing on numerous projects. My ability to do this seems to depend more on the Bank's regulatory climate then on my financial numbers. In other words a Banks willingness to do 100% financing (or 90%, 80%, 70% for that matter) seems to cylcle.
Cash on hand always helps. But if you do not have cash don't let that stop you. If you have a true deal, you can always find the money.
Nothing down means you did not use any of your cash.
Sources of cash for a deal that needs cash?
- credit cards
- partner
- equity in another property
- trade car for the down payment
- agree to do the repairs needed for no change (prior to closing)
- lease/option deal where you are in the middle (sandwich lease).
- seller financing
There are other ways.
It is not always easy to line up the deal so do not assume nothing down is easy.
John
A tangent...
Nothing down will normally mean more leverage. The greater the leverage the more likely the cash flow will be negative or very tight.
Hence there are times when you mgiht find putting cash into the deal will make the situation better if you expect to hold the property long-term.
John