Thanks for the mention @Russell Brazil
@Bronson Kane I still consider myself a newbie and never thought a zero money deal was practical or would ever work. Here is how I did it.
One of my internet alerts was triggered and I found a property that was For Sale By Owner. I quickly called and spoke to the seller. He was an older gentlemen who was selling off his portfolio. He no longer wanted to maintain the 7 unit building (5 apartments, 2 commercial garage bays). Through the conversation, I could sense that he was motivated and looking to move on to the next chapter in his life. I Immediately scheduled an appointment and went to visit the property.
Because he owned this property free and clear, there were many options available for financing. In terms of negotiation, I brought up points about capital gains tax, banks slowing up the process, owner financing, rolling over payments to his estate once he passed on, etc. I asked him what he wanted to get out of the deal and I told him what I would like to get out of the deal.
In the end I got 30k off the purchase price, owner financed at 4% over 30 years with a balloon payment in 7 years. At year 7 if I have not missed any payments, I have the option to pay in full or extend the terms of the loan.
What he wanted. He wanted a 50k down payment so he could walk away from the table with a little something.
I estimated closing costs to be about 10k so all I needed was 60k more. I contacted one of my private lenders. Many people are holding money in the bank or in low yielding investments as savings vehicles right now. Money in the bank is dead money. I offered them a 4% return on 60k. This is beating the banks by 3.7% and secures their money through real estate. In addition, I also offered them hard money terms that we will use on my next flip (8%-12% with a % in profits). This does two things, it gives the lender two ways to make his money work rather than sit stagnate (Rentals and Flips). It also secured my funding for my next flip :)
So with my 60k check in hand I went to closing and actually got money back! Closing costs came just under 10k. So I purchased this property with no money down, am already cash flowing, have tons of room to raise rents, and will be converting the garages into additional units. Last and most importantly, the seller was very happy as I did everything I could to make the process simple and quick for him. As investors thats what we are doing right? Using our knowledge, creativity, and work ethic to provide solutions.
Added bonus, since he was so happy he has since referred me to his friend who is in the same boat and selling off his properties as well. No contracts yet but I have visited about 6 of his properties so you never know.
I hope this post doesn't come across as me tooting my own horn. I am not in the slightest. I have barely scratched the surface when it comes to real estate experience. Rather use this post as proof and follow the advice of experts even when it seems impossible or unlikely. I have surrounded myself with experts like @Russell Brazil, I have read the books by @Brandon Turner, and taken the advice given. It works just go out and do it and remain persistent.
