IS IT REALLY POSSIBLE TO BUY REAL ESTATE WITH NO MONEY DOWN? LEX LEVINRAD
Your challenge will be to find a $100,000 house
correct in your initial assessments, the appraisal
that you can buy for $60,000. Being a cash buyer
should come in at $100,000. If the bank agrees to
will make your job much easier since most buyers
give you an LTV loan for 70% of the $100,000
you are competing with will be looking to get a
appraisal, then they will loan you $70,000. Assume
mortgage. Currently, it is very difficult to get anything
closing costs are $5,000, so after paying Uncle
other than an FHA or VA loan. Cash buyers are able to
Bob back the $60,000 you are left with the
buy properties directly from banks for as little as 50
following scenario:
cents on the dollar. This is a once in a lifetime
opportunity. So start looking for “Uncle Bob”, or
House value – $100,000
anyone that you know that has money. Then once you
Bank Loan – $70,000
have an investor lined up, begin looking for wholesale
Equity – $30,000
real estate deals. When you find a deal, the mechanics
Cash left over from refinance – $5,000
will work like this:
You just purchased a house with no money down.
House is worth – $100,000
AND you now have $5,000 in your pocket and
You purchase for – $60,000
$30,000 of equity in the house. This is called
Uncle Bob loans – $60,000
distressed real estate investing. Your challenge is
Money out of pocket – $0
not finding Uncle Bob. There are many Uncle
Bob’s out there. They are called hard money
Now that you own the house, you wait 6 to 12 months
lenders or private investors. Your challenge is to
for something called “seasoning of the title” and then
find a $100,000 house that you can buy for
you go to your mortgage broker and you tell them that
$60,000. That is the hard part. To do this you are
you want to do a refinance. You want to get a
going to need to find a distressed seller. If you can
conventional mortgage at 5.5%, to pay off Uncle Bob at
learn how to do that then you will have no problem
10%. The bank will require an appraisal and if you were
finding the money. Beginner distressed real estate