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Zero Down Investment Strategies that Work!
Joe: Hey, it’s Joe Crump. Zero down investment strategies that work. I’m going to give you three of them. And these are all part of the zero down structure hierarchy. I’ve got a list of different types of zero down structures that you can use to buy properties, seller financing properties, that make it easy to buy properties without using your credit, without using your cash, being able to buy with no money.
Joe: The first one and the one that I teach my mentor students from the very beginning is called the For Rent Method. And essentially all it is is assigning a lease option to a new buyer. So you’re getting control of a property and then assigning it to someone new. Essentially what we do is we’ll call up somebody who’s got their property for sale by owner and ask them if they would consider a lease option on that property.
Joe: If they would then we’ll say, what we’ll do, we’ll send them over a lease option memo that gives us control of the property and makes us a principal in the transaction. That makes it legal for us to sell that property without a license. If you don’t have a license and you don’t have that document then you’re doing it illegally. So make sure you get the lease option memo signed, that makes you a principal in the transaction. Once you’re a principal then it’s legal for you to sell that property.
Joe: Now. You’re going to go out there and let’s say they want $200K for their property. You’re going to raise that price probably in that situation $20K. You raise the price by $20K, you put it on the market for that, on Zillow, on craigslist, a sign in the yard, using the other marketing techniques that I teach, sending out a blast to your buyers list. And you’re going to sell that property.
Joe: And you’re going to look for somebody with $20K down to buy that property. Typically you’ll get maybe half of that money as a down payment in cash, maybe $10K and then the other half you’ll get on a promissory note maybe $200, $300 a month on a deal like that and they’ll make payments to you over time to pay off the other balance of that money. So you’ll have this income coming in from this deal.
Joe: So you’re going to collect that money. You’re also going to collect the first month’s rent. You’re going to pass that first month’s rent on to the seller. They’re going to get a lease option buyer who has paid $20K to you as a down payment because you raised the price up to – what’d I say – $220K. They’re still going to get their $200K that you promised them. So if that person exercises their option they will get $200K for their property. And in the meantime they’ll have a tenant at market rate on that house that will make payments to them.
Joe: So it’s a great way for them to make more money in that deal. And they’re going to make money through tax savings, through cash flow, through buy down on their note and through appreciation on the property. So that’s the For Rent Method.
Joe: The second one is subject to. Subject to is another wonderful way to buy properties with no money. Essentially all it is is the seller who has a property with a mortgage on it deeding you that property and they give you their mortgage paperwork and you start making payments on that mortgage. You don’t qualify for that mortgage, you don’t have to show income for that mortgage. All you do is promise them that you’re going to make payments on it. And we’ve got a set of paperwork set up so you can get permission to do all this stuff and make sure they have the proper disclosures and all that. That’s part of the Pushbutton Method, it’s part of my mentor program. Or you can create your own or have an attorney create those documents for you.
Joe: But essentially you’re going to be making payments on it. So you’ll need to make sure that the monthly payments are less than what it will rent for. So if you get a property that has you know, $1,200 a month monthly payments on it and you can rent it for $1,500 a month, you know, you’ve got $300 a month positive cash flow on that property. You’re also then, so you’re going to go out and find a lease option buyer for that property once they deed that to you and you’re going to, you know, let’s say it’s a $200K property. You’re going to raise the price to $220K. You’re going to then get $10K as a lease option fee and maybe another couple hundred dollars a month on the other $10K on the lease option feel on the promissory note.
Joe: So you’re going to have an extra $200 on top of the $300 cash flow that you built into it. So you have $500 a month coming in on that, plus you’ve got your $10K of cash on the deal. And you’ll be able to pay that property off over the next 30 years or whatever is left on that mortgage. And then of course the value of that property is going to go up over time. You’re going to get your tax depreciation on that property. You’re going to have your cash flow and you’re going to get the buy down on the note every month. So you have income coming in from a bunch of different sources when you do those subject to. Subject to is a wonderful way to buy. I like the zero down land contract deals better because they have zero interest but subject to is great when you’re buying properties that are a little bit more expensive.
Joe: You probably can’t do a subject to on properties that are above $250K in most cases because the income that those properties make isn’t enough to cover the mortgage on properties that are too expensive. So you want to make sure that you always have a little bit of cash flow in those. And most properties that are under $250K will have enough cash flow to make that work. So subject to is the second way to do it.
Joe: The third thing is the land contract and that was the other one that I was talking about, I’ve talked about on other videos. If you can buy a property on a land contract from a property owner who has that property free and clear then you can ask them for zero interest. And if you can do that you’ll be able to pay that property off in 10 years rather than 30 years. So you’ll be able to build equity so much faster. Your entire payment goes towards your equity. So every month the amount that you’re paying them is just like putting money in the bank. Instead of paying interest which that dissipates. That goes away. You don’t get to keep that money. It doesn’t go towards anything future other than it helps you finance the property so you can keep it the long term.
Joe: So getting started the For Rent Method is a great way to do it, flipping properties making chunks of cash. And then when you start keeping properties, doing subject to’s and land contracts to keep those properties for the long term and build your portfolio which is the true way to wealth in this business. You’ve got to have cash flow. You’ve got to have income to be able to live on and that’s what the For Rent Method is for. And that’s a great way to get started and that’s how I start most of my mentor students.
Joe: But being able to do subject to, being able to do land contracts is where you’re going to want to get to as quickly as you can so that you can keep those properties for the long term. And sometimes you’ll do a hybrid process where you buy some that you’re flipping, you buy some that you’re going to keep.
Joe: All right. I hope that helps.
Joe: Subscribe if you like these videos. Go to ZeroDownInvesting.com and check out my six month mentor program where I teach you personally how to build your own business. Also go to PushButtonAutomarketer.com and find out all about my automation software that will help you automate your whole business and bring in a ton of leads. Also go to JoeCrumpBlog.com and check out 700 free training videos that you can get. Sign up for my free newsletter so you’ll get all that free information that I send out that way just by email to those people as well.
Joe: All right. Good Luck.