Cost for seller financing

[John James]

Learning more about seller financing method and its really discouraging because there is no true 0 money down strategy. Is there a general rule of thumb number i can use from people who have done this before. Attorney and title fees inspections etc.? I want to buy a 4 plex or something worth my time like 10 units.

Even if I find a seller that will accept 0 down payment, I would still have a lot of costs associated with closing. I really want to get started in real estate but I do not have the capital to really do so. Not sure what everyone's secret is

[Erik Hatch]

Credit cards, home equity, friends and family are a few sources. It’s not easy without any money but it can be done. Have the seller finance the closing costs by pay a little more for the property perhaps?

[John Blanton]

@John James starting off without any capital can be difficult, but try to look at the value you can provide to others. Many successful in real estate started out just like yourself. How much have you invested in networking with other local real estate investors? 

What could you do of value (potentially without taking compensation) from them to be able to build trust that you could leverage their capital as either a JV partner or as a hard money loan further down the road? Or you could even learn from them on a current deal they are doing that could help you become more knowledgable on your next solo deal.

For me it all starts with the power of the network and luckily that is free to all!

[Bjorn Ahlblad]

@John James the problem with investing in MF is hitting a bump and not having enough capital or access to capital. Like the situation today. LL's with inadequate reserves will suffer and many will get squeezed out and some will lose everything. A LL who has relied too much on OPM will be out of business, not enough money available and no place left to borrow. This is a good time to learn and prepare.

[Todd Dexheimer]

Seller financing will cost around $5k-$20k in attorney fees, title, inspections, etc. If you go with a lease purchase, then expect to cut those cost in half or more. 

You need more money than that. You should have 6 months of reserves to pay for all expenses in case something crazy happens like a pandemic. 

Save money, cut expenses, flip or wholesale a few properties, bring on a partner. 

[John James]

I know a lot of people say "partner up" but I have tried that route. I have had many properties with a lot of potential but then why I go to a potential partner...they would never just give somebody the downpayment and costs when the other person does not have capital to contribute.

[Brian Gibbons]

Learning more about seller financing method and its really discouraging because there is no true 0 money down strategy. 

WHOS SAID THIS, YOU?

Is there a general rule of thumb number i can use from people who have done this before. Attorney and title fees inspections etc.? I want to buy a 4 plex or something worth my time like 10 units.

ARE YOU BROKE?  WHAT DO HAVE TO PURCHASE?

Even if I find a seller that will accept 0 down payment, I would still have a lot of costs associated with closing. I really want to get started in real estate but I do not have the capital to really do so. Not sure what everyone's secret is.

DO YOU THINK THERE IS A SECRET?  WHY?

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SOURCES OF MONEY

A. TRADITONAL SOURCES

A.1. Savings and loans

A.2. Mutual savings banks

A.3. Insurance companies

A.4. Commercial banks

A.5. Credit unions

A.6. Real Estate Investment Trusts

A.7. Mortgage brokers

A.8. Mortgage bankers

A.9. Pension funds

A.10. Fraternal associations

A.11. Individual lenders including sellers

B. MORE SOURCES, TYPES OF LOANS, ASSETS TO SELL

12. Conventional mortgages

13. FHA

14. VA

15. Private mortgage insurance

16. Farmers Home Administration (FmHA)

17. Family loans

18. Federal National Mortgage Association (FNMA)

19. Insurance policy loans

20. Employer advances and other employer-employee loans

21. Finance companies

22. Vested pension benefits

23. Second mortgage/ second trust deed companies

24. Wrap-around mortgage

25. Blanket loans

26. Passbook savings loans

27. Car loans

28. Personal or signature loan from bank

29. Line of credit

30. Credit card cash advance

31. Borrowing against trust of which you are beneficiary

32. Borrowing against inheritance

33. Assuming, or buying subject to, existing loan

34. Giving real estate broker a note for his commission

35. Checking account overdraft privileges

36. Corporate finance subsidiaries (e.g., Westinghouse Credit Corp., GMAC)

37. Pawnbrokers

38. Trust fiduciaries

39. Margin account loans

40. Selling stocks and bonds

41. Cash in savings bonds

42. Education loans, scholar shi ps1 fellowships, grants

43. Land contract

44. Appealing your property tax assessment

45. Lease/purchase acquisition method

46. Option to purchase

47. Sale-leaseback arrangement

48. Small Business Administration loans

49. Small Business Investment Corporation

50. Economic Development Administration of U.S. Department of Commerce

51. Venture capital firms

52. Investment clubs

C. EVEN MORE SOURCES

53. Tax refunds.

54. Withdraw the interest from your rent security deposit account.

55. Offer to settle for cash now, any lawsuits where you stand to gain.

56. Cancel unneeded insurance policies for refund of premium which was paid in advance.

57. Increase use of credit cards to buy meals and other products and services.

58. Encourage tenants to pay rent in advance.

59. Check recent closing statements for overcharges.

60. File an amended tax return to get a refund of taxes you overpaid in previous years.

61. Apply for any property tax refunds for which you may be eligible.

62. Don't forget semi•-forgotten "rainy day' accounts and insurance policies.

63. Cash caches: Some people are in the habit of stashing cash or traveller's checks in various hiding places.

64. Settle an estate.

65. File for reimbursable expenses.

66. Cash in your Keough and IRA plans.

67. Cash in certificates of deposit.

68. File for rebates.

69. Sell personal property.

70. Recover deposits lleft with landlords, utilities.

71. File insurance claims for vandalism or losses you've been meaning to claim.

72. Collect "uncollectable" debts.

73. If your annual mortgage loan escrow analysis showed an escrow excess, see if the servicing agent will refund all or part of it to you.

74. If you've performed services or sold a product but not yet sent the invoice, send it.

75. Pledge accounts receivables as security for a loan, or sell the receivables.

[Erik Hatch]

@John James

The next good deal you get, share it with me and let’s see if there is a possibility to make it work. 

[Charles Carillo]

@John James

Honestly, there is no good that can come from not having money when investing in real estate. Real estate is a very capital intensive business; not only when you buy. You need to have reserves for repairs, reserves for capital improvements etc. There is a reason that a bank requires and verifies your post closing liquidity. What happens if you are just scraping by and you need a $3,000 furnace installed within 24 hours when it is 0 degrees outside? Lastly, in regards to purchasing with 0% down, what owner is really going to believe that you will keep your end of the deal with no skin in the game? Would you ever finance a 4-plex or 10-plex for someone without a down payment? I would only consider this if the buyer was going to use the down payment funds to invest into the property within the first 90 days.

[John James]

Yes I agree you need to have reserves and a good amount of capital for real estate. I am not living in a shed and using Starbucks wifi, I just do not have 3 or $400k for downpayment on multifamily properties. I would also expect the property to be cash flowing well to use for expenses. Reserves would only be used on an as needed basis.

[John James]

@Brian Gibbons nothing you said was helpful but thanks anyways.

[Jonathan R McLaughlin]

@John James does that post come across as entitled

@Brian Gibbons gave you a whole bunch of things to at least think about. You don’t need 300-400k in a lot of places and if you are a decent and hard working guy you might be able to get 5-10% equity of a deal in return for finding it and doing work managing it. Then you have some credibility. I dont see you trying to bring anything to the table here

[Andrew S.]

Originally posted by @John James:

@Brian Gibbons nothing you said was helpful but thanks anyways.

Real Estate, like many other businesses is built on relationships and reputation.  Take a minute and check out @Brian Gibbons’ reputation on this board!  
with THAT kind of attitude, you will have a hard time succeeding. 

[Brian Gibbons]

Originally posted by @Andrew S.:

Originally posted by @John James:

@Brian Gibbons nothing you said was helpful but thanks anyways.

Real Estate, like many other businesses is built on relationships and reputation.  Take a minute and check out @Brian Gibbons’ reputation on this board!  
with THAT kind of attitude, you will have a hard time succeeding. 

Thank you Andres S.

John James,

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THE WORLD OWES YOU NO BREAKS. -- Brian Gibbons

[William Walker]

@John James I think what people are trying to say (some better than others) is that it’s not realistic to get in to real estate (especially bigger properties) with no money. Sure you can find these rainbow stories on the forum where people hit a homer with little to no money, these are rare and usually people with experience and connections. 
imagine saying you want to own google stock but not put any money into it. Or have a retirement account but not putting any money into it. If it were that easy everyone would do it. 
the realistic way to do your first deal is to either house hack (buy with no money down and rent out the spare rooms), save up the 20% and buy an investment property with a typical mortgage, or partner with someone where you find the deal and they bring the $$. 
hopefully that’s somewhat helpful. Keep studying. Don’t get discouraged. Also realize If you don’t have 3k you shouldn’t buy a MF property. 

[Andrew Carlson]

You gotta have a positive attitude, my man. At the end of the day, it is all you have.

[Dillon Dale]

@John James if there's a will there's a way. You just gotta get out there and ask. You will get told no many many times, and that is ok.

[Nicholas L.]

@John James I sympathize with your frustration, at one point I bought a rental property with 25% down before I got into BP and used up all my cash. Can you owner occupy and get an FHA loan? As a few others in this thread have noted, at a minimum you need reserves. If you don't have reserves... save up reserves.

[John James]

@William Walker When did I say I dont have 3K? lol

@Jonathan R McLaughlin @Andrew S.Lets take a look at what @Brian Gibbons said:

A. TRADITONAL SOURCES

A.1. Savings and loans

I am on this thread looking for creative financing strategies and have already said I do not have enough capital for a 25% down payment for multifamily properties... But youre right I should look into my savings account just to double check what I have in there

A.2. Mutual savings banks

Oh ya! I totally forgot about that mutual fund I have in it that has $400K Thanks!!

A.3. Insurance companies

What? lol

A.4. Commercial banks

Oh hey they require 25% down great advice!!!

A.5. Credit unions

oh they require 20% nice!!

A.6. Real Estate Investment Trusts

Pointless but thanks

A.7. Mortgage brokers

What? you want me to call a mortgage broker and say I dont have that much capital can you help me?

A.8. Mortgage bankers

What? lol

A.9. Pension funds

Yes! I totally forgot I have this huge pension fund i can use!!

A.10. Fraternal associations

ya seems to be really popular

A.11. Individual lenders including sellers

Ya should I go on... lol

[Sam Shueh]

That is title and escrow officer's job.

[William Walker]

I didn’t say you only had 3k.... 
And is that all you gained from that post?  Again, either get the down payment or partner. It’s possible to find a seller financing that requires little to no down payment but good luck. Keep the positive attitude. 

[Sean Mcevoy]

@John James I’m not a seasoned investor by any means but my advice is work on yourself first before you decide to jump into real estate. I’m 25 and I bought my first 3 unit with my own cash as well as rehab when I was 23. I worked really hard at my job saving all the money I could in order to buy, rehab and I was eventually able to refinance most of my money out which allowed me to buy my primary residence in NY two months ago.  I have a little over 30% equity in the deal with really good cash flow which I don’t touch because I work a full time job. I am able to save everything from the property and use that for another potential deal down the road.  When I graduated college and started working full time I educated myself so when I had money I could jump in and that’s exactly what I did. Now I have credibility and I have something to show for it. If you don’t have any money partner with someone who does, but you need to bring something to the deal to make it work. That could be property management, finding the deal, doing the rehab. No deal is truly no money down in my eyes, you either have money or the hard work and sweat equity. 

[John James]

@William Walker Take a look at your own post. Keep the positive attitude

@John James I think what people are trying to say (some better than others) is that it’s not realistic to get in to real estate (especially bigger properties) with no money. Sure you can find these rainbow stories on the forum where people hit a homer with little to no money, these are rare and usually people with experience and connections.
imagine saying you want to own google stock but not put any money into it. Or have a retirement account but not putting any money into it. If it were that easy everyone would do it.
the realistic way to do your first deal is to either house hack (buy with no money down and rent out the spare rooms), save up the 20% and buy an investment property with a typical mortgage, or partner with someone where you find the deal and they bring the $$.
hopefully that’s somewhat helpful. Keep studying. Don’t get discouraged. Also realize If you don’t have 3k you shouldn’t buy a MF property.

[Damaso Bautista]

@John James

That’s kind of have the same question I have. Why is buying a 10 unit where you need $400k to put down the only thing that is worth your time.

Why not start small with something you can afford right now then build from there?

There is no secret.

There is no magic pill.

Building a real estate portfolio takes time unless you have a big bank account.

Then once you do have a big account you still have to have the guts to pull the trigger.

$400k of your own money takes a long time to save. At least in my case.

I think the real question for you is if you saved that much money through hard work and a lifetime of savings would you bet that on yourself and buy a building.

I feel like many keyboard investors will pull the trigger on making this purchase all day long.

But until you are putting your life savings on the line you can only speculate.

Im sorry I didn’t answer your question but I hope you understand the intent.

[Ramon Flores]

@John James If it is a good deal, then perhaps you should put it under contract. Find a buyer and wholesale the deal. I know you won't cashflow or keep the property but at least you can profit from it. Best of luck!