No money Down Opportunity in Utah

[Jaiden Olsen]

I've got a potential Opportunity to acquire a property with no money down. It's a 4-plex. 

My question about a no money down opportunity has to do with how to analyze the numbers? Because I have no money down, any cash flow generated would result in an infinite ROI. For instance, if I acquire a property worth $500,000 and it looks like it can cashflow at $250/month, my initial total investment would be $0. Therefore my ROI is infinite. The market in Salt Lake City, Provo, Ogden, and Logan is crazy right now, so financing anything is really hard to justify. CAP rates are regularly between 3-4%. But I need to get into another deal, and the future looks promising. So my question is this: is it okay to justify 2-3% CAP rates if my ROI is infinite? and if so is there a lower limit on the amount of cash flow I should expect on any given property?

Thanks for your feedback!

[Blair Poelman]

A zero-money down deal on a 4-plex sounds freaking amazing.

I hate to throw cold water out there, but I would question the validity of the deal.  It just sounds so good, and when something in this business sounds too good to be true, it often times is.  

I'm assuming it's seller financed - since any lender is going to require at least something down.   Ask why the seller is going to let you take the net instead of them keeping it themselves.

Look at the leases, look at the tenants, the maintenance history, stigma of the area, etc... Also look into the seller's situation - that is often times a factor on seller finance or zero down deals. 

In my experience, there is always a catch on deals like this  - not that the deal isn't good, but there's likely a reason you're getting this great of a deal.  Pull out your magnifying glass and take a real close look at everything.  

It sounds incredible, so if it checks out then you struck gold.