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Episode #21 – No Money Down Real Estate… Myth, or Reality?

In this episode of the High Return Real Estate Show, Jack and Shecky discuss the concept of “no money down” and whether or not it’s a myth or reality. Learn about the eight primary strategies that you can use to secure a property with no money down.

Key Lessons Learned:

No Money Down

  • Jack originally read the book Rich Dad, Poor Dad but didn’t have the money to put the strategies into practice. After reading no money down Real Estate, Jack realized that there are ways to make a start with no money down, but he decided that he wouldn’t rush getting into the game with no cash.
  • There are a variety of ways to borrow money. The first is getting a loan or borrowing money that allows you to buy real estate properties but most of them require some sort of security. Leverage on it’s own is not a bad thing.
  • The second is in some cases you can assume an the existing mortgage. If the property doesn’t have a “due on sale” clause, you can use the seller’s existing finance as part of the purchase price. This only really makes sense if the interest rate is attractive and makes sense.
  • The third is a lease with an option to buy. You and the seller agree to a predetermined price that at some time in the future will be paid off and a portion of your rent goes towards the down payment. This kind of agreement usually favors the seller and puts you, as the buyer, at a disadvantage.
  • The fourth and possibly simplest form of no money down is seller financing. This works best if the seller owns the property outright and is very motivated to sell. There are a variety of ways to structure this kind of deal and it comes down to negotiating the details. Seller financing is also a way for a seller to generate a semi passive income off a property that they don’t want the hassle of owning anymore. You will have to offer an interest rate attractive enough to the seller to make the deal worthwhile.
  • The fifth way is swapping your own personal property. It’s possible to trade other property like collectibles and valuables that the seller would be interested in. It’s also possible to offer your services if the seller is in need of something you can provide.
  • The sixth is bringing on a partner who has capital. If you can broker a deal that makes sense for all parties, you may not need to bring any of your own money to the deal.
  • The seventh is taking on the seller’s other debts.
  • The eighth is swapping real estate properties.

Due Diligence

  • There is a lot of marketing around the no money down concept. Some of them are more than willing to take advantage of people that want to make money but don’t have the knowledge or experience to know what deals make sense and which ones don’t.
  • We often see and hear what we want to see and hear, there are many ways someone can mislead you.
  • Real no money down strategies do exist, but they often have complexity that make it difficult for novices to execute correctly.
  • It is possible to find a performing property that you can use the no money down strategies on, but the chances and the margins will be slim.
  • You can’t get a deal that gives you cash flow and forced appreciation in a no money down situation.
  • It’s not just about getting in the game, you should get in the game to WIN. Don’t get sucked into the marketing and do your due diligence.

Resources Mentioned

Rich Dad, Poor Dad


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