Please help me figure this out....borrowing your way to riches....

[Brittaney Woods]

OK, so my husband and I just got into a huuuge argument over this.

He is not associated with real estate in any way btw.

I was trying to explain to him my plan/strategy to acquire a bunch of owner financed investment properties within the next couple of years. I got all my information from Robert K and Tyler G Hicks' books.

Basically, in my situation my brother and I will inherit a house in a couple months. The house is free and clear and I plan to borrow maybe 10k against the house.

I will then look for an owner financed single fam home. I will try to put as close to $0 down as possible. If I absolutely can't find an owner willing to take 0 down, the most I'd put down is the 10k I borrowed against my house....

So, lets assume I take over a single fam home and had to put the 10k down. We will pretend that I'm buying it for 100k-10k down...so 90k. The owner wants me to pay him 500 a month. I get the tenant to pay me 700 a month, I only profit 200 a month.

Here is where it gets tricky...according to the books I have read it seems as if I can some how borrow against that single fam home. Can I do this if I am not on the title/deed? I'm assuming not, so how would I go about getting my next investment property? Would I just need to save up or bowwow a small down payment for my next property?

Here is why we argued, my  husband told me "You'll always be in debt because you'll always owe someone"....since I'll owe the bank 10k for borrowing against my house and I'd owe the owner of that single family 90k (but the tenants are paying my mortgage).

Is the whole idea to acquire a string of investment properties w/o putting any money down? Do I just need to have a bunch with small residual incomes until they are paid off? Lets just say I get 20 properties with no money down and the value of these properties is 1 million. Then according to my husband I'll be in 1 million dollars worth of debt.....but does it really matter since all of my tenants will be paying my mortgages?

I don't know if I'm wording this wrong but I am not crazy lol. I know I can come out on top doing this....I just need a sensible way to explain it to my husband.

[Nicole Pettis]

@Brittaney Woods First mistake is not having your husband on board. He doesn't necessarily have to be involved, but he has to at least support the idea. Otherwise you are going to have a hard time making this work. Also is your brother going to be on board with you borrowing against the house? Make sure you guys are in agreement on how you are going to handle the house?

Secondly, yes you will always be in debt if you owe someone. And while these properties may be worth "1 million" doesn't mean that they will equal that when sold and if you don't have someone in said property, then you are responsible for that payment. Huge, huge risk that you are not taking into consideration. 

Third, one way or another you will always have to have money down. No matter what, whether its your money or someone else's. There is no such thing as "no money down" in real estate. There always has to be money from somewhere, from someone. 

Honestly, owner financing is not something I am not an expert in, so I really can't comment on your strategy, however, I think this is going to be more difficult than you think.

As for your REI strategy, I would really take a step back and rethink it. Educate yourself some more, while I know that many on this forum use owner financing as part of their strategy, I don't think that is all that they use.