I have read alot of different courses on investing with none of your own money out of pocket. How do you get around investors who insist you have “skin” in the deal? I am in desperate need of putting together my first deal to get my foot in the door. I have absolutely nothing to work with, but have the faith that all of these courses cannot be wrong. I want to purchase properties through my LLC, it is fairly new and has not done any type of transactions as of yet. So far I have an investor who will finance 60-80% with 20% down. The sellers have agreed to carry back the remaining portion. The asking price is $169,000, 5 of the 8 units are currently rented giving it a positive cash flow with room for improvement. I am thinking the property taxes can cover my portion of the closing if the seller also contributes. How do I get around the 20% down and meet the investors requirements?
Am I crazy, should I walk away, or is this a doable senerio?
KLawson
If you have absolutely nothing to work with, what money do you have for repairs when things go wrong? If you’re counting on your proposed positive cash flow, what happens when the tenants are late on paying the rent and the repairs cost more than what’s left over?
If you have no other money, it’s very dangerous to get into a buy and hold scenario. Do the other 3 units need work to be rentable?
You need to post many more details about the property to even see if it’s a deal or not, but I would be very concerned about jumping into something like this when you have no other money.
We started out with a multi-unit property (which most people advise against). It’s worked out great for us, but we had other available money for when things didn’t go as planned. The last thing you want to do is get into this prematurely, lose it, trash your credit, and place the tenants in the situation of having the building foreclosed upon.
Thank you. I had these same concerns. I have thought about bringing in a partner and then buying them out in the near future. I can provide free labor for minor repair and cosmetics. It is my undderstanding that there are no major things needed to the property. But the cash from the property right now is minimal. If tenants were lost instead of gained it could be a disaster. Your right, it is very risky. Thank you.
I agree. Bring in a partner or don’t get into this deal.
Buy and Hold when an investor has no reserve can be very risky, especially nowadays.
Try to build some cash reserve before you get into these scenarios - wholesale/flip is a good way or partner with seasoned investors. That way you will also learn the ropes.