I would like to share my experiences with others to further reinforce that you CAN buy property with little or no money down.
Last summer I started reading the CRE Online Main Real Estate Forum and ordering books and courses. As a fairly young woman, most people I know discouraged me saying that I would be taken advantage of, or I didn’t know what I was getting myself into. Well, here’s what I’ve gotten myself into in the last 12 months…
Bought a 4-plex as an owner-occupied property. Paid $190,000, worth $210,000. Had to put $5,000 up at closing. Rents are $1,675 for the three rented units, payment is $1,611 per month. I get paid to live there!
Found an out-of-state owner who agreed to deed me her house to get out of it! Loan amount was $58,000, appraised for $76,000. Had to pay $1,000 excise tax and $81 at closing. Not a bad trade for $18,000 in equity.
Found a very motivated investor in the Sunday paper, who had a 1031 payoff due and needed cash. He sold me four homes at 73% of the appraised value. They appraised for $388,000, sold to me for $288,000. I asked him to sell them to me on an owner contract with a payoff due in 30 days. This would then allow me to immediately refinance and pay him off without putting money out of my pocket. He agreed.
We closed yesterday and I had to pay $1200 in closing costs. This was immediately offset by the $2,000 I got in rents from the three houses which already have long-term tenants. I am already in the process of refinancing these properties for 80% LTV through a bank with a no seasoning program. I will close next week and, after paying closing, prepaids, and all the other lovely fees, I will walk away with an $11,000 check. Not a bad trade for $388,000 worth of properties.
That same investor asked me yesterday if I would be interested in another house which appraised at $99,000 for $84,000. And he’s willing to do a 5% carryback, so I can buy with no money down!
So there you have it folks, some more examples of how creative real estate investing is possible. I haven’t added it up, but I think I have come out of pocket with less than $7,000 in the last year–Not a bad trade for $775,000 worth of properties.
For those of you just starting, I would suggest you find a very good mortgage broker. Financing is the key in this biz, the deals are easy to find. Good luck to all of you, and I wish you success in all of your real estate ventures…