Can you buy real estate No Money Down? Most Realtors will tell you no – typically 95% of realtors will tell you that. Not their fault, they just aren’t taught that in realtor school – also most lawyers are never taught the creative strategies in real estate either. Most sellers want top dollar for their house and they want to cash out their equity, and who can blame them?!
However, there are sellers that are in a bind and are MOTIVATED to sell their properties. Motivation comes in many forms: death, divorce, taxes, job loss, downsizing, vacancies, partner troubles, moving due to job transfer, bad management, and many others.
When a seller is motivated you can educate them, and show them that if they have little equity in the property after all the selling costs (realtors, lawyers, holding costs) they will be at risk of having to pay out of pocket to get out of the property! For Example:
House in Calgary is worth 450K, they currently owe 430K – after holding the property for 3 months and paying all the holding costs they would be left with 10K if the property sold for list price – ouch! Not very great for the owner. They are also in a position where they can no longer afford the payments, the investor could show the owner that they could pay them 5000.00 upfront and not take the risk on the market and they could be rid of the property right away for 430 (what is owed on the mortgage by way of assuming with qualification) pocket the 5K and be done with the headache. Investor “buys” 20K in equity for 5K which is like buying a 20$ bill for 5$ pretty good ROI.
You could even sweeten the deal (depending on your exit strategy) by giving them a 15K prom note for 6-8% for a 5-year term and 0 cash down which is almost giving them all the equity in the property and creating a great win-win for both parties. Solve a problem crate a profit the tenant of all entrepreneurs!
Respect the hustle,
Tim Reid
