No Money Down Private Financing
How does no money down private financing really work and what are the best methods? I have a very good job but money tied up in a few things. I really want to get into owning a few apartment buildings but want to do it with little or no money down, whats the best way?
Find a motivated seller that would L/O or put you on a L/C. But even I would want some kind of investment on your part. If you have nothing involved it is very easy to walk away when things get tough. It happens all the time. On the type of building you want that is your only option unless you use Equity from your primary.
Lori
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No money down does not mean there is no cash in the deal. Things that qualify as no money down can be...
Cash from an unsecured loan or credit card
Cash from a money partner
Cash from refinancing another property
Cash from a hard money lender if you are really getting a deal so that 65% LTV in cash is all you need to close.
Non cash include sweat equity (where you do the repairs for the owner and they sell you the place after), trading of something of value such as your car, seller financing but placing the financing on a different property so the new one has equity when you close the deal (new loan gives seller cash for part of their deal)
There are lots of ways to structure a deal. You need a seller who has needs that match what you have to offer. By extension, the 'you' includes you and other people or entities that can make the deal happen (the unsecured lender, etc above).
Risks: Ignoring the extra work and the likelihood that you will miss more deals then you get, a nothing down deal is normally highly leveraged. Hence the cash flow will normally not work very well if at all.
John
PS. Look at it from a different angle. Why should a seller care about you and what you have to offer? Figure that out and figure out what you can bring to the table. Then you will find deals that work for the two of you.
[addsig]
100% convential financing is available on NonOwnerOccupied property if you have good credit. This is what I have used to get started.
But rember that 100% financing still requires you to pay closing fees. These can add up to several thousand dollars.
I guess the No Money Down portion of No Money Down can be misleading.
Should we coin the phrase: No Money Down translates to - "Duh! You Pay Closing Costs" or CCO "Closing Costs Only" Deals