So you want to buy some real estate without using any of your own money? Let me show you how you can accomplish this task.

There are a few prerequisites. First, the property should be free and clear. Next, the seller must be willing to carry back a note that is secured by the property. So, you've found a good prospect? Great! Here's what you do...

Strategy number one

A free and clear SFR is selling for $160,000, and the seller wants $32,000 or 20% down. The terms of the note are:

N	I	PV	PMT	FV
360	10	160,000	1404	0

The note is for the full purchase price and due in 10 years. What is the FV?

N	I	PV	PMT	FV
120	10	160,000	1404	145,500

We explain to the seller that we can give him the $32,000 down payment, but he will have to agree to go without the first three years of payments on the note. He agrees.

Now we sell three years of payments to an institutional investor to yield 14%.

N	I	PV	PMT	FV
36	14	41,079	1404	0

The institutional investor will pay $41,079. You can pocket the $9,079 difference between the amount the investor will pay and the amount you have to pay for the down payment.

After three years of payments are received by the investor, they will revert back to the seller. The principle balance at that time will be $157,042 with 84 payments remaining.

N	I	PV	PMT	FV
84	10	157,042	1404	145,500

Make sure that when you sign the purchase agreement the contract states "this agreement is contingent upon the buyer selling 36 monthly payments of $1404 for a minimum of $32,000." Furthermore, you should have the note sale close at the same time as your real estate purchase.

Benefits: The seller gets "his price" and gets cash at closing. Additionally, you purchase the property with no money down and keep $9,079 at closing.

Strategy number two

Create two notes on the above property and sell the first. Here's an example:

First mortgage for $100,000, at 10%, amortized over 30 years, due in 10 years. The monthly payment is $877, and the balloon is $90,938.

Second mortgage for $60,000, at 10% amortized over 30 years, due in 15 years. The monthly payment is $526, and the balloon is $48,998.

Sell the first mortgage to an investor for $79,127 to yield 14%.

The results are: The seller got "his price" and the negotiated down payment amount. You get the property and can either put down a big down payment or a little down payment and pocket the difference.

Remember, there are a 101 ways to purchase real estate with these types of strategies. Sit down and pencil out what you want to accomplish. Then think of all the ways you can accomplish it. Money is not the problem here!

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