Buying Real Estate For No Money Down

[Stewart Beal]

The Power of Real Estate and buying buildings for no money down: In 2008 my father did a construction project at 277 Gratiot, Detroit for a man who owned 6 buildings in Detroit's Harmonie Park near Ford Field, Greektown, and Comerica Park. The man paid my father about 80% of what he was owed but admitted he couldn't make final payment. My father asked me, 25 at the time, to meet with the man and offer to manage his buildings, and see if there was a way to make him whole, as the man was beginning to default on a lot of his debt. This was back when Detroit was much different than it is today, way before Quicken Loans and Dan Gilbert, back then you didn't stop at red lights if you know what I mean. I quickly realized there was no hope to save 5 of the buildings from foreclosure, but 277 Gratiot, then known as the Tobin Building had potential, I tried to help the owner, but he himself personally was too financially distressed, so I focused on saving the building itself. Sterling Bank in Southfield had debt on the building in the amount of $1.9M and the downtown development authority had a 2nd mortgage of $1M. I asked the owner and the bank, could I have the building with no money down if I simply agreed to personally guarantee the debt and start making the monthly payments again? The bank evaluated the building and determined it was worth in a fire sale maybe $400,000 and here was a 25 year kid willing to pay the $1.9M debt and guarantee it so they said sure why not lets roll the dice on this guy, and the owner was glad to be relieved of the financial liability. It was on its face, even though the building was worth $400k a huge win for me, I just gained ownership of a 32,000sf, 8 story office building in downtown Detroit for $0 money down. I dedicated my life to the building, worked thousands of hours promoting it, caring for it, did little leases, did big leases, then in 2012 downtown Detroit started to change, here came quicken loans and Dan Gilbert, rent started to climb, owning the building quickly became more profitable. In 2019 I had paid the 1st mortgage down from $1.9M to $1.4M, for many years the building had cash flowed on a monthly basis, and I received an offer from a neighboring building owner for $5.2 million. I accepted the offer of $5.2 million, paid off Sterling Bank of $1.4M the Detroit DDA of $1M and walked with $2.8M after investing exactly $0 to purchase the building 11 years earlier.