Know-How Exchange : Just for Fun

Hi chadgall,

There is a ton of information on getting rich in real estate using other people's money.

www.ronlegrand.com
www.richardroop.com

Are just 2 of the most popular, especially Ron LaGrand, he is an icon in this area.

Lots of info on Google, at the bookstores etc., teleconferences at night, seminars around the country.

I hope that helps.

Yes.

The most logical and traditional methods are mentioned above, with Tim crossing the line into the world of the infommercial and "get rich" authors I am speaking of.

There are tactics one can use to start buying property without spending a dime of your own money. Most of them are related to the following:

1. Good Credit. Technically, the first thing those seminars and books will tell you is you better have good credit. Why? To get loans from banks, friends, credit card companies, etc. Use this money as the down payment on a property, use the credit card to pay for new paint, landscaping, carpet, etc....then you sell the house for more than you put into it. Profit without spending a dime of YOUR money.

2. Negotiating skills. This is coupled with searching for what they call " motivated sellers and buyers". These are people who are desperate to sell or buy at any cost. You can find the property for sale, meet with the owners, hear the stories, and if they are desperate, make them an offer like; "I will take over ownership of this property right now if YOU pay for the all closing costs and commissions to the agents". If they say "yes", basically, DEPENDING ON YOUR CREDIT-WORTHYNESS TO QUALIFY TO TAKE OVER THE MORTGAGE/PAYMENTS, you get the property deed without spending a dime and try to sell it for more than what you owe the bank before the next payment is due (usually 45 days from closing).

So, basically, it revolves around credit. Can you do it with bad credit? Sure, but you need someone to back you; a co-signer, a wallet full of cash, a Ferrari to put up for collateral etc.

Now, if you are a very clever negotiator, you MAY be able to talk the owner into carrying the note instead of a bank (this usually does not require credit checks), meaning you owe the owner, not a bank....you talk them into giving you rights to sell the property AND keep any profit....you try to sell before the first payment is due. But it needs work? Offer a carpenter, painter, landscaper, whomever, a % of the profit from the sale in exchange for some work.

You can also negotiate balloon payments or in the case of tenant properties, a % of rent. For example, you want to buy a 20 unit apartment building. You go to the owner and say "I'll take the property off your hands right now. There are 20 tenants who pay $700 per month in rent...SO...you put the property in my name, you walk now and go on your Florida vacation, in 30 days I'll pay you $10,000 (from part of the rent $$$ you now collect),then 90 days later, I pay you $250,000, the remaining cost of the building". The crux here is you are using the rent to make payments AND repairs while you have a few months to fix up the property and sell it for a profit. Easier said than done huh?

The whole key is to find someone who is anxious to sell and do a lot of fast talking that will offer them a way out of their dilemma in exchange for allowing you to take over by spending as little of your own money as possible. Otherwise, become an agent and work on commission (which is not that easy....perhaps more expensive ($3000 for a license) and if you don't sell within a set # of days/months, Real estate agencies drop you to give someone else a try. Tough game. I like the creative route, but you have to possess the right personality to pull it off.

Good Luck!

One basic thing to keep in mind is the difference between borrowing money and someone investing money.

Borrowing is where you borrow the money for something. The lender does not own a share of your company (unless you default, then they could). Takes good credit for you to do this, as investors want to keep their risk down (and someone with good credit is more likely to repay a loan). This increases the risk to you, as you have to pay off the loan (principal and interest) no matter what. But should what you used the money for grow more than the cost of the interest, you get all the gains.

Investing is where someone takes a share in your venture, and also a share of the profit. It is not necessary to pay off what was invested, but any profits will be split with the investor. Less risk for you to get investors, but reduces the upside also.

Read Rich Dad, Poor Dad.