How to Buy a 41 Unit $0 Down and Make $400K profit

[Michael Ealy]

When people think of buying a house or an apartment building with no money down, they are thinking of using OPM - other people's money. So they raise capital - investor capital so that the principal in the deal doesn't have to bring money to the table (hence "no money down").

But if you raise money and you use that money as downpayment, for me - it's not a true no money down deal isn't it?

I've been told that doing a "true no money down deal" with apartment buildings is impossible. Well...it is possible and I can show you how I've done it.

I've acquired a 41-unit building because the owner asked my company to take over the property management. He makes good money outside of real estate investing and after seeing my success in turning around tough buildings even in tough neighborhoods, he came to the conclusion that he won't do a real estate deal unless me and my team are involved.

So we did a land contract where I take over the property - truly $0 down. I was thinking originally that I would need to raise $200,000 to improve the property. But, through efficient property management and financial discipline, we improved the property's operation so it produces enough cashflow, which we then used to improve the apartment unit finishes. We made them look a lot better than before, we applied for higher section 8 rents and got approved for them.

We increased the average rents from $589 to $695 per month. We got 6 offers on the property when we put it out for sale and after closing & selling costs and we will net over $400,000.

$400,000 is not a bad profit in less than 12 months.

$400,000 is not a bad profit on a truly no money down deal.

You might be thinking: well Mike, it's easy for you to say, but I can't do what you did. And you're right. Maybe you can't do what I just did.

But I hope you learn the PRINCIPLE behind this real-life example. 

The principle is this: you can use your expertise, experience, or skill (or even other people's expertise, experience, or skill) in lieu of cash as the downpayment. 

By doing this, even if you have $1 in your bank account, you can invest in real estate. You just need to be creative and hustle!

What about the experienced apartment investors out there? Have you acquired a building truly no money down? Share with BP Nation how you did it. I can't be the only one who can do this, right?

DISCLAIMER: I am NOT saying that you should buy a building no money down. In a lot of cases, buying a building no money down actually does NOT make sense as you can be overleveraged and the property will not cashflow. But in the above property where all it needs is better management and low cost of doing value-add, a no money down deal where we use our management and renovation expertise as our downpayment - makes a lot of sense.