No Down - Possible? - Posted by Norm Ames

Posted by Vince on January 09, 2001 at 09:00:17:

In case my example wasn’t clear, you give the total rents and deposits due to you at closing to the seller as the majority of their down payment. Then, whatever’s left over after you give the rents and deposits to the seller you can pay down over time (if the seller agrees, of course).


No Down - Possible? - Posted by Norm Ames

Posted by Norm Ames on December 30, 2000 at 22:59:31:

I know of three rental properties who’s owners are “motivated” and will carry contracts. I have nothing to offer as a down payment. Good personal credit. What can I offer them? The properties are 1x4plex, 1x6 plex, and 2xtri-plexes. Thanks for any suggestions!

Use The Rents… Here’s an example: - Posted by Vince

Posted by Vince on January 09, 2001 at 08:57:08:


Something that should get you really excited is that if you schedule to close the deal on the first of the month, all the rents (first and last month) and all the security deposits become your posession!

Some states have laws governing what can be done with the security deposits and require you to keep them seperate. But the rents are due on the first of the month (verify this with your seller).

Simply add up the amount of all the rents (first and last) from each unit. That total is what will become YOUR property on the day you close the deal. So, you can subtract that amount from the down payment you need since those funds will be available to you at closing.

If that doesn’t cover the entire amount of the down, simply ask if the seller will allow you to make payments on the rest of the down, to be paid in full by a certain date. Then, use the rental income over the first few months to pay that amount to the seller.

Seller wants $15k down payment
Rents for all 16 units = $7200 (based on $450 rents)
Deposits for all 16 units = $7200
Total due to you at closing: $14,400

Simply tell the seller that you’ll give them the $600 you owe them in the form of a short term note or just give them the $600 out of your pocket at closing.

If you need to cover closing costs, just use rent and deposit proceeds to cover those and just ask the seller to take back a bigger note for the down payment.

Hope this makes sense. It’s a powerful way to get into a multi-unit property with little or no money down.


Re: No Down - Possible? - Posted by Bob Johnson

Posted by Bob Johnson on December 31, 2000 at 24:18:17:

Haven’t done a low- or 0-down on investment property, but have done two on personal residences. The first the owner had free & clear, I paid closing and escrow costs, and moved in. The second, I had a local bank take a 75% first, and the owners took back a second at about 2 points over conventional finance rate. In the first case, the owner was retired, wanted cash flow and didn’t want the tax pain of getting all their profit at once. In the second case, the house was an estate and the family needed a good deal of cash out to pay for medical, etc. expenses.

And those were both before I started buying books and home-study courses. It’s not that hard to do, if you find the right seller. If I can do it by dumb luck, you can do it with a little bit of thought.

Bob Johnson