I just had a client buy a home with truly zero down

[Erik Browning]

So this clever client I have was dead-set on buying a home with zero cash out of pocket. Her and her husband had about $12k to their name and a new baby. They are young and wanted to move into a modest home that they could fix up and eventually rent out in a few years while starting their family.

This is how they did it:

- We got them pre-qualified with an FHA loan for a purchase in Mendocino County.

- Since they wanted to buy with no money down, we used one of our lenders that has a forgivable down payment assistance grant - one that you do not have to repay. No strings attached, you just have to be a first time home buyer and the rate is slightly higher.

- After that, we worked with her agent to target properties that need some work and where the seller would be willing to pay for all closing costs as part of the offer.

- The seller accepted and my clients used some of their cash as the earnest money deposit, which was returned to them at the close of escrow.

Really proud of them for doing this and being so open to this creative idea.

[Account Closed]

Quote from @Doug Pretorius:

Say it ain't so, Mike! You broke the cardinal REI rule: Always get paid to buy houses!

But maybe we can forgive you. Just this one time. Don't make it a habit.

Well, okay. Now I have to tell the rest of the story.

The property appraisal came in at $725,000. I'm buying the property for $350,000 to pay off the existing loan plus $177,000 to the seller for a total of $527,000. I'm doing hard money in this case and between two lenders bringing in $350,000 on one and $250,000 on another for a total of $600,000 to closing (none of my own money) so $600,000 - $527,000 leaves me with $73,000 in my pocket minus closing costs. No realtors so of course no one has to pay realtor fees.

But, I did have to put down $100 of my own money which I get back at closing.

It will require about $40,000 to flip which will come out of the $73,000 from closing. Now the question is, will prices hold long enough for me to actually sell the rehabbed house for $725,000?

Probably not. I expect to sell at about $700,000. Still, it's an "okay" deal.
And since I don't usually use realtors I save a few bucks there. I start advertising the moment I own. I just haven't learned how to calculate ROI when I have no money in it. ;-)

Normally I'd have someone with an SDIRA or Pension provide the money and share the profits, but I had to act a little quicker on this one. 

I'll post the whole transaction next week.