on paper I guess I can see it happening, but realistically
can you really flip a house w/ no money out of your pocket?
I guess if you used hard money and could acquire, rehab and carry for 65% LTV and sell before that money runs out I suppose it’s possible. Is there really any other way?
Has anybody on here w/ no money out of pocket been able to successfully do it?
Yes, my friend made 50k on flip with none of his onw cash.
Can it be done? yes, but you will have to put in lots of hours and be patient because you won’t find many deals. Even if you don’t need the money to wholesale, it is best to have it to market.
yes, its possible but very difficult to find.
I did a deal last year year I bought a $185k apartment building for less than $3k out of pocket (including closing cost, inspection, the whole nine yards). Ok, its not no money down, but pretty close.
However, I was able to get the seller to carry a sizeable note becuase he knew I have a lot of other properties and thus my chance of default was lower than Joe First-timer
The most realistic way to do an “almost no money” down deal is a straight option.
Let’s say you find a home that IS NOT on the market but the seller wants to get rid of it. A little background here… Most of these homes come from people who have owned them for many years and are not on top of the market, price wise. I had a guy who was moving to California, his wife was already there, and he needed the house up until the day he moved. They had bought the home for $50,000 ten years earlier and he based his price on the cities assessed value for taxes, which around here are always lower than market. The house was a dump but it was $40,000 under market in AS IS condition. He did not want to deal with a realtor so I expalined how an option worked.
“All this say’s is your giving me 30 days to sell your house for what you want for it. I’ll pay YOU, $500 to let me try. If I can’t do it we’re done, the $500 is yours the day I give it to you, it’s not a deposit. If I can’t close it in 30 days your done with me and made $500 in the process. Sign here, here’s your money!”
I advertized the house on the weekend, low balled the advertized price and got 70 people there on Sat and Sun. GONE for $15,000 over his price. Assign the option at the closing, I’m listed on the HUD 1 form and done. $500 turns into $15,000 in 20 days. Best almost no money down deal in the world. OPTIONS!!!
In San Diego 65% is virtually impossible to find simply because of the cost of real estate here. On a $400K ARV at 75% would be $300K loan amount, then subtract expenses and you get your offer price, let’s say $250K. Finding something $150k below market is quite difficult.
The deals we do are typically at the 75% ARV mark and it takes a lot of looking and moving fast when you find one. We use 100% of either private or hard money, so it’s technically a no money down. We never use our own money to buy a property.
10/25/06 bought at $380K
ARV of $573K based on area sales
Sold 1/24/07 at $529K
skydivecock,
Yes, it is absolutely possible to do REI deals with none of your own money. I have done many of these deals. Owner financing, subject 2, and assigning the contract are just 3 of the ways to buy with no money down.
Mike
YES!! YES!! YES!!
Not only can you find deals with Owner financing, subject 2, and assigning the contract like Mike said above but I also have a bank that gives me 80% of ARV (After Repaired Value), again no money out of my pocket!!!
JOhn
What bank gives you 80% LTV ARV??
On a side note i’m attempting to do a very creative (and somewhat risky) no money down deal. I have 3 american express business cards (don’t report to personal credit) with each one at 22,800 credit line. I’m attempting to reollacte them to one card that has a 4.99% balance transfer offer for life of the blance, then balance transfer that into my checking account then immediatly tranfer that into my E-loan savings at 5.25% interest so they even out. Use that as a free line of credit that can be accessed withing 3 business days (simple transfer into checking) to buy houses with all cash, then refi using a HEL at penfed.org (no season, no closing costs, 5.9% 20 year) after the repair work. Put money back in Savings account. Hold property for rental. Of course if you buy it low enough you can get paid as well as having a great low fixed rate w/cash flow. One note is american express computes minimum payments on business cards as 1/50 of the actual balance or $15.00 which ever is higher, so your paying 1600 a month plus interst on an 80K loan before you do the REFI which can hurt even though most of it is going towards principle, unlike a 20 year amortized note. Other note is don’t be a DAY LATE or you will be rate jacked!
JB,
First, just to be clear, using your own money in any way isn’t a no money down deal. No money is when you use other people’s funds to buy properties.
Second, I’d want to know if you’ve talked to a business lawyer/CPA who advised you that you can’t use business cards to comingle with personal funds. If the business is loaning money in any way, you need the proper documentation and tracking.
AMEX business cards-> checking account-> personal savings account–> use savings funds to buy personal investment properties?
I want to see a CPA or IRS auditor sign off on that.
john, thanks for the reply. I would like to know who will give you a loan at 80% ARV? Are you talking about a 'hardmoney" lender or a traditional “wholesale” lender that typical mortgage brokers use? Most hard money is capped at 65% of ARV…some will go to 70% ARV w/ a high credit score and a track record or several hard money loans. …There are conventional wholesale lenders that will do “re-hab” loans at 80% on non-owner-occupied homes, but they are few and far between and further you better have an ultra high credit score…not bashing you, but don’t casually make the statement as if anybody can get an 80% ARV loan…b/c, they can’t. I would say that 90% of investors cant. I’m a mortgage brker by trade and I will debate anybody on this board on that issue. I’m sure you know what you’re talking about…HOWEVER, this mssg. board is about exchange of information. I don’t know why everybody that posts on here regards their “sources, knowledge,lenders” w/ such secrecy…??? If you don’t want to exchange ideas, then don’t post on here…!!!..I hate that ****!..“”“Oh, I know such and such about such and such…but I’m not going to tell you…”“”"…then why the hell are you posting on here???..don’t run off at the mouth about what you “KNOW” if you’re siting it from a source and not name the book, lender, etc…that you got it from…Get real people…I’m sure that most of the people that post on here by in large in not in your general area. I’m sure some overlap occurs but for the most part these folks are all around the country. nobodies gonna steal a deal from you that got this “magic” insight from this board…
skydivecock,
I know your response was directed to John, but I’d like to answer it (at least from my perspective). I have done many deals where I borrowed 100% of the money for a deal based on the bank loaning a max of 70% of the appraised value (with their appraiser). As I’ve said, I use two small local banks that keep the loans in their portfolio. I have excellent credit and deal with the president or vice-president of the bank. Many times people have asked what the name of the bank was. I won’t say.
The reason is not for competitive reasons. The reason is that if I gave the names of these banks, a bunch of people would be calling them pestering them for loans that they couldn’t possibly get. The bank loans me the money because they know me and because I have a track record of success over many years. That would not be the case for someone calling them from out of state. So, you see, there could be very valid reasons for not sharing some information. It would serve no useful purpose and could easily harm me.
Mike
I am new to this forum & new to investing. I am a loan officer at a small bank in the Florida panhandle. We do 80% ARV rehab loans. I don’t know if it is appropriate to say the name of my bank or not.
yea, there are lots of “hometown” banks around the country that have niche programs for their community. I was just talking in general. And not so much even to John, but in general many posters state this and that,but aren’t quick to give up any info.
Sure there will always be cases w/ local banks…so I understand that…I was really just generalizing…
skydive,
The rules clearly state “no referrals” and “no networking”. This is an educational forum, not a forum to educate you on the hand everyone is playing. If you know their are lenders that loan 80% ARV from someones post, that should be good enough for you to know it exists and that you will have to do your own research instead of piggybacking off of someone else. Exchanging contact information is not what anyone is here to do (unless their selling their own crap).
Every post does not require a bibliography or some type of proof to appease you. If you don’t believe something that is said, don’t follow the advice. If you’d like to find sources, knowledge, and lenders, try google.
Skydive:
I have read all the previous posts. The best advice was by Petemfa who said use Options. The only disagreement I had with his post was the advice to take out a 30 day option to purchase. I have had 3 month options, 6 months, 12 months and 5 year options and so can you. The Option fees I have paid are negligible, and you can do this if you back up the deal with the RIGHT WORDS. Here’s some examples.
Mr Vendor this property needs a lot of pricey work done to it before we canrent it / sell it / and .or hope to make a profit, therefore will you give me a 6 / 12 month Option so we can do the work and then put it back on the market. The answer is usually Yes.
Mr Vendor, I’ve got to be upfront with you, this is not the type of property we normally look at, but I’ll agree with you its got distinct possibilites, providing that is/ that we commit ourselves [our rehab team] to improving it/ and we may need time to obtain Council permits, and we intend drastically to remodel it/ to improve it, BUT, we need your consent [help] and approval, therefore would you grant us a 4/ 12 month option to/ to /to /to do all this work etc. Once we have this Option then we will go to work and you know its off your hands and on its way to being off-loaded.
Fix your option price, then either sell it, improve it, do what you want with it, just get the guy the price he wants and pay him out. I have actually driven off with the keys, got vacant possession, put it on the market, and all you have to do is keep them informed. Silence can kill a deal and ruin a sale or good business relationship. So keep in touch with him/her. And deliver on your promises.
skydivecock,
First of all 80% ARV DOES EXIST!!! Not my fault you think that it hardly doesn’t exist. I guess I should feel lucky that I’m in the top 10% of investors that get the 80% ARV, right, wrong!!! I’m sure there are tons of other investors out there get the same deal I do or even better ones.
You said… “not bashing you, but don’t casually make the statement as if anybody can get an 80% ARV loan…b/c, they can’t.” I never said anyone could What I said was “I also have a bank that gives me 80% of ARV (After Repaired Value), again no money out of my pocket!!!”
You also said “I will debate anybody on this board on that issue”, well sorry to burst your bubble but I’m not going to go into a big debate about this because I know what percentage my bank gives me.
You also went on to say, “not bashing you” BUT WHAT IN THE HELL DO YOU CALL THIS???
I’m sure you know what you’re talking about…HOWEVER, this mssg. board is about exchange of information. I don’t know why everybody that posts on here regards their “sources, knowledge,lenders” w/ such secrecy…??? If you don’t want to exchange ideas, then don’t post on here…!!!..I hate that ****!..“”“Oh, I know such and such about such and such…but I’m not going to tell you…”“”"…then why the hell are you posting on here???..don’t run off at the mouth about what you “KNOW” if you’re siting it from a source and not name the book, lender, etc…that you got it from…Get real people…I’m sure that most of the people that post on here by in large in not in your general area. I’m sure some overlap occurs but for the most part these folks are all around the country. nobodies gonna steal a deal from you that got this “magic” insight from this board…
I don’t run off at the mouth about anything, I do not B.S anyone nor do I hide behind anything or keep anything in secrecy!!!
My name is John Cook, I live in Carlsbad New Mexico, I’m freakin 37 years old and I’ve invested in REI for about a year and a half now. I deal with a local “hometown bank” for all my rei deals. And I’m a General Contractor…
All I did was answer your post and now you’re basicly trying to beat me up. If you don’t like the answers you get from your posts, don’t post…
Sounds to me you’re mad at the world… Smile it’s not that bad, have a good day!!!
JOhn
john
I just happend to get on a tangent while responding to you, but the comments wherent directed at you. If you reread my post, it was a generalization and I also gave your your due in the post.
skydivecock,
The reason I took it personal is because you started your tangent like this " I’m sure you know what you’re talking about…HOWEVER"
I’m over it so lets move on and everyone help each other. That’s what this site is all about.
John