How To Buy Rental Property With No Money Down | Rental Property Investing
Let me clear the air for you once and for all. You do not need any of your own money, and you do not need any of your own credit. And you do not need a bank such as Wells Fargo or Bank of America.
𝐉𝐨𝐢𝐧 𝐎𝐮𝐫 𝐏𝐫𝐢𝐯𝐚𝐭𝐞 𝐅𝐚𝐜𝐞𝐛𝐨𝐨𝐤 𝐆𝐫𝐨𝐮𝐩
Welcome back to the science of flipping podcast. I’m your host, Justin Colby. And we are going to be talking about rental building wealth, when you should start, why that’s important. And quite honestly, what my views are so that you can start building wealth right away. Now, the question I get posed all the time is, I don’t have money, I don’t have credit, I don’t really know how to find a deal. So how can I start buying rentals, let me clear the air for you once and for all. You do not need any of your own money, and you do not need any of your own credit. And you do not need a bank such as Wells Fargo or Bank of America, I promise you this as last year alone, I bought 14 rentals with you guessed it, none of my own money, none of my own credit. And I did not use a bank. So I’m going to tell you how I did that. But first, let’s jump into what I think everyone really wants to know. Should I start out buying rentals early on in my career? Or should I accumulate a bunch of money first? Well, it’s a really good question. And if you stay to the end, I’ll tell you how you can do everything without any of your own money in any of your own credit. And by the way, if you have not yet realized this is also a video, you might be listening to this on iTunes. It’s also a video right over there on YouTube, make sure you are subscribing to my Youtube, I dropped at least five videos a week. So you want to make sure you’re subscribing to my youtube youtube.com forward slash Justin Colby. With that said, I bought 14 rentals last year. And yes, this was my 14th year in the business. So it’s a little I don’t know what the word is. But kind of interesting 14 and 14. But I’ll tell you this, the biggest mistake I’ve made I think a lot of you guys have heard me say this before is I didn’t start accumulating rentals early enough, I would have told myself looking back 14 years from today to start buying rentals immediately. And here’s how to structure it right now. I didn’t have me 14 years ago, all I knew is what I knew. So I’m trying to impress upon you out of the gate, if you’re just getting started, or maybe you’ve done some deals, making a little bit of money, you do not need to hoard or stowaway a vast amount of money for you to buy rentals, you also don’t need to have good credit. So you can go to some bank you don’t need either. So I’ll tell you a little bit about that towards the end of this episode. But what I can tell you are there are ways that you can bring in a capital partner. Now that’s what I actually did on my 14 rentals. And it’s not because I didn’t necessarily have the money. It’s because I knew the same thing that a lot of restaurant tours No. Now little interesting what the restaurant tour if you’ve never heard that word some people have some people have it. It’s usually the type of people that create a great chain of restaurants or they have multiple restaurants and different styles of food, right? So in Miami that’s really, really big in Scottsdale that’s really, really big. There’s something called the fox concepts. Well, the guy’s name is last name is Fox. And he basically created I think he’s up to like 14 different concept restaurants. Out here there are several different restaurant tours that have a very similar type of thing where they have concept restaurants. And one of the things I learned quickly about these individuals and their ability to scale since restaurants are not cheap to get started, let alone to maintain is they always bring on Capital Partners. And I don’t want to say always, you know, 100% of the time, but I would say the vast majority of the time. And I thought to myself, Well if it’s good enough for them and they’re building out and starting restaurants from millions and millions and millions of dollars. Don’t you think it’s good enough for me? And I took that to heart and I really realized, you know, Dave Grutman is a restaurant tour in Miami, very, very famous, some of the hottest restaurants in Miami, Komodo, Poppy steak and more are his restaurants. And he’s a huge advocate of this model of bringing on Capital Partners, because that way you can scale faster. So why you don’t need your own money is because there are plenty of people out there. I know this to be true because one of my high end elite students literally just put one post on Facebook, saying that she’s looking for capital partners on a couple real estate opportunities she has and immediately she had three people up to $500,000 worth of capital that she had exposure to now now she still needs to work out the relationship and how that’s all gonna look. But three people with the sum total combined of roughly $500,000 came to her saying I’m interested in this opportunity you have in real estate investing. And so again, this is really important for you guys to hear. There’s a lot of money on the sidelines right now, there’s a lot of money in self directed IRA’s, 401 K’s people who are literally just hoarding cash, which I’m not, by the way, just to be clear, I am not hoarding cash. Inflation is brutal right now, quite literally, in normal inflation markets, 2 to 3% is kind of normal. So even if you’re keeping your money in your bank account, and you’re getting 1%, you’re still not even keeping up with inflation. Right now, inflation is 7%, or north of 7%. And I haven’t even looked in the last couple of weeks. And so cash in the bank really doesn’t do any good until I really invest almost all my cash, it’s actually kind of crazy. I think my accountant thinks I’m nuts and would advise otherwise. But I do for me, I do that in a place so that I can diversify. So I can have pieces of income coming in everywhere. And so I have multiple businesses I run obviously, that is cash intensive. And so there’s a lot of people out there that do have cash. Again, IRA, self directed IRA’s are a great way to find that. Other people just to actually have cash sitting in the bank account. But you don’t know that because you don’t ask for it. So one of the things I learned really, really early on, is if you don’t ask you don’t get. Now you don’t need to go around begging people and asking people, Hey, can I borrow money? That’s not what I’m saying at all. What I’m saying is give people the opportunity. And a simple post, like my student, posted here on Facebook, just on her page, not in groups, just literally on her thread, got her to raise roughly $500,000 in potential capital. And it’s because she just put it out there. Right? So the next thing I would tell you is you don’t need a bank. So let’s just say you make a post on Facebook, as Justin told you sue. And you then realize, okay I just got someone that has $200,000. But you know, the Reynolds that can only buy me one or two rental is based around buy in. For me, I do the BURRR method, right? So I buy it, remodel it, rent it, refinance, and repeat, right? That’s the method I run. Now 200 grand might get you a couple, but you need to leverage that with a bank or lending of some sort. So now there are actual lenders right now that used to be considered hard money lenders, they used to only be there for my or your ability to rehab flip properties, they now have the ability to do long term 30 year rental loans and my loans that I’ve been getting a roughly 5% interest, which by the way, is going to be very similar to what a bank gives you. You just don’t have to go through all the hurdles, the personal, credit check, all those type of things to work with these lenders, you just need to make sure that the asset is appraised correctly, right. So if I buy it, and remodel it, I want to be in roughly 75% of ARV. And as long as I can do that they’re gonna lend to based on the asset and the viability asset, not necessarily me now, yes, I do still have to sign docs. And yes, I’m saying that there is, you know, I owe the money back. But the reality is that you’re gonna have to do that with the bank anyways, right? You’re signing to say, I’m gonna pay you back, right? So there’s no difference there. And I would tell you guys, you don’t need your own cash. I just told you that about Capital Partners. And I just told you, there’s many, many, I know two of the biggest right now, lenders that will help you buy long term holds, right? And what’s even better is if you do come across your own deal, and you are going to have to remodel it, they’ll give you the, you know, more traditional kind of hard money lending for a very short time, and then they’ll refi you into their long term hold, lending. I mean, it’s just brilliant.
Now, here’s the other thing that I can tell you is, if you are not yet already doing this, this is the one action step I’m going to tell you to do right now. Okay, right now, many people come to me, especially when they’re just getting started saying, I don’t have enough money even to put down earnest money on some of my deals, or I don’t have enough money to put down a down payment on some of my deals. I can’t even get started thinking about buying rentals. Well I want you to get out of your own mind because here’s your first solution that if you’re an action taker, you are going to do this right away. There’s a company that I use called PCS. So if you go to https://www.primecorporateservices.com/tsof/ stands for “The Science of Flipping”. Go to primecorporateservices.com/tsof. If you’re on YouTube, you will actually see it right here on the video, it’ll show up on the video, primecorporateservices.com/tsof and why I want you to go there is because they have an ability to get a line of credit for anybody. Now, if your credit is absolute garbage, I mean, just awful, you may still be able to qualify, you might not get much you might get thousand, two thousand, three thousand. But what that might do for you, is give you enough capital to put down an earnest money deposit to get the property locked up. Because some of you are thinking, I don’t have any money, I can’t even get that going. That’s your answer. Now, this is for everybody. By the way, if you don’t have any lines of credit, if you don’t have any business credit, you don’t have anything like that, as a moment in time, go to this website, primecorporateservices.com/tsof talk to them. The call is complimentary book a call with them, it’ll be totally complimentary to let them know you heard Justin’s podcast or watch Justin’s video and get your lines of credit. Because for some of you that might have good credit, you might be able to get a five, ten, twenty, thirty, forty thousand dollar line of credit, maybe a $50,000 line of credit, again, using other people’s money, not your own. And that might actually allow you to avoid even bringing in a capital partner. So the first thing that you need to do, I’m telling you is go have a complimentary call with them, talk to them about wanting and needing a line of credit. And they will talk you through the process of what it takes to get one for some, you might get a two or three or four or $5,000 line for others, you might get a 30, 40, 50, $60,000 line, it will not hurt you. Right, this is the key to using other people’s money, I need to really understand that because again, if you’re one of those that get the larger line, you might need to go you might not need to bring in a capital partner. Okay? So really important that you do that. And then I would say, you need to fix your mindset. First and foremost, if you believe you need to have the money, you’re just thinking incorrectly.
Now I want you to realize this rehab flipping homes. Most people don’t use your own money most. So what makes it different for a long term rental, or maybe even a short term Airbnb rental. There is no difference. Okay. So if you’re okay, using other people’s money on a rehab flip, why are you not going to be okay using other people’s money on a long term hold? It’s silly, right? I just literally told you the three steps that you need to take to get started today, my biggest mistake I ever made in my career was not buying rentals earlier in my career. If I just bought one rental a year, for the last 14 years, I would have that first rental almost completely paid off. The second one very close to completely paid off. The third one great amount of equity and guess what I get to do then if I started back in year one, I can go to the bank and get a HELOC. A Home Equity Line of Credit and I can wrap those properties and the equity outstripped the equity out and go buy another 14 rentals if I would have done that in year one, so it’s never too late. Get started now, don’t tell me you need to go get a deal done first or wholesale a deal first or fix and flip a deal first. Garbage. You can start today buying rentals now I’d encourage you to go make a bunch of money wholesaling and flipping homes. I love that now teach you how to do that if you want me to. But I will also tell you do not miss this opportunity to have low interest rates. You don’t need a bank you don’t need your own money. Go to primecorporateservices.com/tsof get your own line of credit. Let them know you got to schedule a call with them let them know I sent you in that could be just the start you need for all of this right here. So hopefully this helps you guys. See you guys on the next podcast. Peace