Today, we are talking about how to buy properties with little or no money down. You might be wondering how that is possible. The first thing to realize is that we are in the Columbus, Georgia market. It’s easier to pull off here than in the California market, or other markets around the country where prices are much higher. In Columbus, you can buy properties for $50,000. That’s easier to come by than $500,000.
I want to talk you through the first deal I closed as a real estate investor so you’ll get some ideas for how to buy your first rental property. The home I bought was $48,900 and it had 3 bedrooms and bathrooms. It was a nice single family house in a good neighborhood, but the house was small. I definitely do better deals now than I did then, but this was my first one and I wanted to buy the property.
So I need to figure out how to pay for it. At that point, I had no money in my checking account. I was completely broke, but I had great credit with a credit score in the 700s. That’s not everyone’s situation, but it was mine. I did a bunch of research and found a company called Hard Money Lender. It’s a scary title, but they lent me 65 percent of the money I needed at an 18 percent interest rate. So this was a terrible deal and a short term loan, so the payment was very high. I was earning a decent income so I knew I could sustain the high payments.
The second thing I did was to calculate how much I still needed. That was about $20,000. I asked relatives for a loan, and they gave me an interest only loan of about $10,000. My payments to them were small, and then I took an advance on my credit cards to come up with the remainder of the cash I needed to pay for the purchase and the rehab.
So this is not a recommended strategy. It’s neither healthy nor safe, but it gave me the experience I needed to get the deal done. I took on a ton of risk but I had nothing to lose. In my opinion, the greater risk was to do nothing.
It is possible to buy a property with zero dollars. It frustrates me to hear people say that they can’t buy real estate because they have no money. If you’re serious and you want to be a real estate investor, you can make it happen. There is risk involved, and you need to decide if you want to take that risk. For me, the deal could have gone the other way – I could have defaulted on my loan payments and trashed my credit and lost the property. But it did work out because I rehabbed it and refinanced that property for $74,000. I got a loan that was 75 percent of the new appraised price and I was able to clean up the bad debt. I had a better interest rate and when the lenders wanted to see the rents I was collecting and saw I was managing deal well, I was in a much better position.
Many people present this easy low risk strategy when it comes to investing, and that wasn’t my experience. It was hard. I learned a lot and took some bruises. But I got my deal done and I’ve done several deals since. That risk got me started and I don’t regret it.
You can do the same thing. Get lines of credit and use your credit cards. Find family or friends who will partner with you and loan 
you a down payment. Show them you will deliver a return on their money. That’s what they’re looking for. Do that and you’ll get what you want.
If you have any questions about how to make a real estate investment dream a reality, please contact us at Bradstreet Proper. We’d be happy to give you some help.