What are more creative ways to find a down payment?

Question

Account Closed · Answer

There are a number of ways to have it YOUR way when investing -

• Ask the seller to loan it to you
• Do an installment down payment agreement
• Give the seller a note - pay him a percentage of the rent you will be collecting
• Give the seller a post dated check - post dated for 2 years
• Offer a blanket mortgage on another property you own
• Ask seller to repair something (we call it the"Front Porch clause) instead of him doing it, he gives a check in that amount ($50,000) that it will take to do the repair - you endorse the check and give it back to him as the down-payment.
• Borrow SOFT MONEY on another property you own
• Bring a limited partner in on the deal - they borrow money on their property - you pay them back over time with a nice interest and don't forget a buy out clause
• Ask your girl friend, your Mother or drinking buddies - offer a free apartment for a limited amount of time
• Ask the owner to finance 100% of the deal - keep him in as a limited partner 
• Offer 20% more for the building if the seller will take back a principal only mortgage (that is without interest) offer a balloon payment and split notes.
• Ask the seller to let you manage the building for a year - collect the rents and make improvements from the rents received
• Owner financing with split notes (details on this to come)
• Proposal to the owners daughter - make friends with the seller's wife - let him know you really want this property - beg for help - tell him you are a nice person - just getting started 
• Offer a Hybrid offer - offer less - improve the building and give seller 20% of the profits
• Try a Delayed Settlement with right of possession and subject to the mortgage - you make payments until settlement 1-2 years later. Seller is your partner - he may love to be without payments and management

I can think of some more - but it is getting late and wife is waiting for me to come home with all that rent money I collected to day.

This is a wonderful business - it can be fun and profitable --- oh - I'd forget about asking a lawyer - anybody can tell you how to be conventional - STICK TO CREATIVE solutions ---

Charles

Account Closed · Answer

You are welcome - hope those words and concepts had value to your investing exercise - Thank you so much for the vote - I always feel great when others here on Bigger Pockets garner something from my responses (been working on answers now for 48 years).

• Some of the ideas sound way out there  but you never until you ask - the good thing is knowing the questions to ask and how to execute them in writing on a contract offer.

I remember not long ago - my son and me looked at a property - we really didn't like the equity position so we asked the seller if we made an offer would they give of us $7,000 - the seller thought about it for about a minute - and wrote a check for $7,000.

We closed the deal and assigned it almost immediately for a nice assignment profit - oh - we kept the $7,000 (it paid for the trip) you just never know the degree of motivation that sellers have until you probe.

• I feel it is important to take your time when negotiating - don't try to solve their problem too quickly, make an appointment to meet again - and always counsel (that is ask many questions) and get the seller to invest in the negotiation - ask to see the deed - the settlement papers and maybe their title insurance policy. 
• Build a rapport with the seller - hobbies - type of work - job - find a common ground -
• We have a program at my office with leads - it is called the 5 minute drill. So it goes like this - as soon as the seller (prospect) answers the call - the 5 minute count down begins.
• In those 5 minutes our Negotiators start their interrogation to find the bottom line, to make an offer and to finish the negotating call in 5 minutes.

It's fun - try it sometime

QUESTIONS:

• who is on the deed
• how long have you owned it
• why are you selling - vacant or occupied
• has it been listed - how long - why didn't it sell - how much
• do you need top price or fast sale
• what's are the liens on the property - how much - current or in default?
• how much do you need above your mortgage
• can you help with financing
• how fast do you want to settle
• if we could make you a cash offer tomorrow - what's the best you could do
• where can I send you an offer (get email address - we do DocuSign offers)

Ding - ding - ding........ 5 minutes are up. Close to the end of the 5 minutes it is required for our Negotiators to make a verbal "trial offer" (less than what they said they wanted for their property).

Have fun - this is a great business ---- Charles

John Thedford · Answer

Ask everyone you know. One of the best sources I found for private money was by asking an attorney if he knew any private lenders. Instead of "we buy houses" on your back window ever thought of "we pay high interest for your cash". Not sure how that would come across but you would probably be the only guy in town with that message on his car. Sometimes the most crazy idea is the one that works.

What are more creative ways to find a down payment?

Most Popular Reply