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HOW TO INVEST IN REAL ESTATE
WITH (little or) NO MONEY DOWN…and minimum risk
Table of Contents
Introduction
6
Chapter 1. The Importance of Attitude,
8
Perseverance and Flexibility
Chapter 2. What
to Look For
12
Single Family Homes
Condos
Duplex
Four Unit Complex
…or Larger
Strip stores, office buildings, warehouses, etc
Slums (example)
12 Unit (example)
What to Avoid
Single purpose buildings
Apts. – Furnished vs unfurnished
Chapter 3. How to Locate a Suitable Property 20
Legwork, Time and Attitude
Motivated Sellers
Owner transferred
Death
Foreclosure
Retiring
Health
Divorce
Partnership disputes
Talk to Banks and other Lenders
Chapter 4. How to Analyze the Area
23
Drive around
Check out condition of properties in area
Check the area in general
Chapter 5. How Analyze the Market
26
Chapter 6. How to Find a Motivated Seller
29
Get to know the seller
Get the seller to know you
What does seller intend to do with proceeds
Deed in lieu of foreclosure
Chapter 7. How Analyze the Property
33
Gathering Information
Analysis Program (IPP)
Chapter 8. Ways to Finance the
Property
39
Understanding how a mortgage works
Seller financing (#1 choice)
No closing costs on mortgage
More flexible on terms and rates
More motivated to negotiate
Talk to Banks and other Lender
Understanding how lenders work
Be prepared for rejection
Have your presentation ready
Property Details
Your Financial Statement
Property Financial statement
Intended improvements and costs
Market details
Photos of property
Your track record (if you have one)
Bank discounting their mortgage
Interest moratorium
Payment moratorium
Extend term of mortgage to reduce monthly pmts
Financing Alternatives
Normal Amortized loan
Interest only mortgage
Adjustable rate mortgage
Graduated payment mortgage
Balloon mortgages
Wraparound mortgage or
(all inclusive deed of trust)
Land leases
Combine financing approaches
with multiple mortgages
Sale/Leaseback
Assume seller obligations
Cautions on Financing
Term of loan and balloons
Graduated interest rate
Pre-payment penalties
Non-assumable loans
Loans assumable at a revised interest rate or terms
No pre-payment allowed
Verifying present mortgage balance and terms
Chapter 9. The Importance of Using Leverage
51
How much leverage is advisable
When should you pay off a mortgage
Multiple mortgages
Chapter 10. Where to Locate
Cash
58
Family and Friends
Banks
Private Lenders
Mortgage Brokers
Mortgage Bankers
Credit Cards
Sell off part of the property
Refinance another property
Borrow against life insurance
Borrow against stocks
Personal Loans from bank
Home equity loan (use caution)
Add closing costs into mortgage
Give something in lieu of cash (car, boat, stock)
Escrow, advance rents, etc. as part of down payment
(caution)
Trade equity in another property you own for down payment
Trade for anything you have that they want
Sell a mortgage at a discount
Chapter 11. How to walk away from the closing
62
with nothing down
and cash in your pocket
Buying a below market value and finance big
(negotiate with lender or seller)
Chapter 12. Understanding the
Various
64
Types of Ownership
Lease/Option
Joint Ventures
Partnerships
Corporate ownership
Chapter 13. How to Negotiate
with the Seller
67
Start renovation before closing
Pay more for the property for concessions you need
Lower interest rate
Extend term of mortgage
Seller Refinance
Sell mortgage to a third person
Chapter 14. How to Create a
“win-win” situation with a Seller
71
Chapter 15. How to Negotiate
with a Lender
72
List and cost of intended renovation
Photos
Chapter 16. Understanding
Closing Costs and
74
Closing Statements
Chapter 17. What to Expect at
the Closing
78
Chapter 18. How to meet expenses on your new property
80
Generating income
Should you have leases
Flipping the property
Chapter 19. When and Why You
Need to Sell the Property
82
Equity too great
Problems with property
Chapter 20. The Importance of
Record Keeping
86
Income received
Expenditures for renovation
Carrying costs on property
Normal property expenses
Value of your “sweat equity”
Chapter 21. How to Avoid Taxes
on the Sale
88
Exchanging
Refinancing for cash
Chapter 22. What to do if You
Make a Mistake
92
and the Investment Flops
Deed in lieu of foreclosure
Chapter 23. The Secret to
Pyramiding
95
(not the ones in Egypt)
Appendix:
Thirteen Steps to a Successful
98
No Money Down Investment
Case Studies: How to Put it all Together
The “slums” - turning a bad property
101
into a good investment
The 12 unit apartment complex –motivated
104
seller but a good property
Forms, Checklists, Sales Contract
107
FSBO Website Links
122
About the Author
127
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