Real Estate Investing With No Money 101.

So I know you’ve heard and seen plenty of ads containing the headline of this article. Trust me, I’ve done or know just about all of them. Let me show you which method I think is the best one to start out from nothing when investing in real estate.

I really don’t have a name for this technique. It involves many aspects of investing, not just one. But let’s get right into it and by the time I’m finished here, I should have a name for this investing technique.

In life shit ain’t for free, especially in real estate. Your gonna have to have some funds but not a whole lot. Maybe a $100 lol..so don’t have a hear attack on me. 

So let me assume we have $100 to get started. So starting of with that..let’s dig in.

We need to find a property that we can make some money on. The first thing you do is take a trip down to your local court house. You want to visit their tax department. They will have a list of tax properties for a small fee like $25 or something around that number. Don’t worry, we’re not investing in tax properties here I’ll tell you how to do that in a later post) this list of properties are a diamond for finding real motivated sellers. The kind that just want to get out of a situation, and that’s where you come in. 

So we got our list…it’s a huge list of several thousand properties. What you need to do is find the properties that fit these criteria:

  1. Must be three years or more delinquent on property taxes. The longer the delinquency the better.
  2. Make sure the properties are in a area you know about.
  3. Make sure the house is still standing and isn’t just vacant land.

This step is about 80% of all the work you’ll have to do with this technique. 

Go down all the properties on that list and pick the ones with the zip codes in the area your familiar with. Once you’ve done that, you’ll have to go down that list again to make sure their property owners info is listed. If not then don’t worry to much about it, I’ll show you how to find them later. 

Once you’ve gotten the list of properties in your givin area, now it’s time to drive around and take a look at them. Your making sure the lot isn’t vacant, the property isn’t occupied, and the house ain’t falling down. These days I typically use google maps or anything like that just to take a glance of the property before I got out.

The next think you’ll want to do after you’ve chosen 10-20 properties, is contact their owners. I use a a people’s finder website whic usually cost $25 a month. Also, you’ll have to take another trip to the county court house, but this time the probate office. Take your list of 10-20 properties down, and ask them for a copy of the property deeds. They are gonna change you another $1 or so per page. When you get the copy of the deeds, cross reference them with the owners information on the tax list, if the information matches then search for the owners using a people’s search site. Do this for all properties that you have.

So now we should have 10-20 properties with deeds, owners contact info, and back taxes info(which is the amount to redeem the property, you get this from the tax office at the court house on your second trip down there). It’s time to evaluate each property. 

When evaluating the properties, you’ll need contractor estimate, and  broker price opinion or BPO (or I have another way to find the after repair value of the house). You can use Zillow.com or the taxable value of the house, just add $10k to the tax value and use that as the after repair value. 

Once we’ve gotten our contractor’s estimate and found a after repair value, we’ll use my 70% rule to come up with a price for the properties.

I call this the 70% rule…use this evaluation method because it basically guarantees that you’ll make a profit on every deal you do no matter the location and or property. So here it goes…

For practical matters I’m gonna use a $100,000 house. 

We found a house that we’ve determined has a after repair value or ARV of $100,000. Let’s say the owners want $70,000. Now to a untrained eye paying 70 cents on the dollar seems like a no brainier. But let’s hold up a second and look at it from our 70% rule.

Asking price $70,000

After Repair Value $100,000

Repair cost $25,000

We’re gonna multiply theater repair value by .7 which is 70%.

100,000

X .7

=$70,000

Now $70,000 is what we would pay if the house was already move in ready but it’s not, so we deduct the rehab cost from this number.

So..

$70,000

-25,000( the repair cost)

Which leaves….

$50,000…

So if we were buying this house for ourselves, then $50k would be the maximum we would pay for this house period. 

So that’s the 70% rule, do that for every property on your list. This is valuable information that whoever purchases this house will need to know. (I find it easier to get the full price of what your asking for if you’ve already done the leg work for the property)

So now we should have a list of 10-20 properties, with construction estimates, tax resumption info, deed info, and owners contact information. All there is to do now is call the owners to lock the homes under contract. I have a great script that I use, but it’s always better to do your own in your words. 

This is what you wanna do when talking to the homes owner. Don’t talk to them as your a interested buyer, but talk to them as if your trying to provide them with another source of income that they could use. Our goal is to establish a joint venture with the property owner. We want to sell the property to a investor who will then do all the rehabbing and flipping. We just get paid…

Include these in your script…introduce yourself, tell them what your calling them about, and offer them a benifit. So for instance… hello my name is___, and I’m an real estate investor calling about this wonderful house on _____(address). I’ll like to do something with it to put some extra money in your pocket TODAY! Ask them a question that has a yes answer..like “so you’ve had this property a while?” Then when they answer, follow up with another question..like “has it been vacant a while?” then ask them another question that you know is gonna be a yes answer. The reasoning behind asking them three questions that has yes answers to them is because you want them in a yes state of mind before asking them to sign a contract for $1…lol, yes I said $1…after you’ve asked them the three yes questions ask them to meet with you to sign a contract..don’t mention how much your gonna give them just book the meeting. 

When you meet them that’s when you’ll discuss dollar amount. Look, if you give them the information or have it already ready then they’ll just go with it. But if you give them the opportunity to give you their own info as to how much they want for the house, then that’s when you’ll have to negotiate. As far as these people, they just want some money that’s it. So before you meet with the owner, already have your contracts filled out and signed. 

When you meet them, explain the contract out and full to them and give them the $1 when they sign. I typically tel them how much I’m gonna give them for the house during this stage. People are less likely to say no to you when they see figures on a contract. They start thinking about all the things they are gonna do with the money and not even pay to much attention at this point. That’s why you wanna go through the whole contract. 

So how much do you give them….how much do you wanna make? How much is your time worth? Find out what the house is going for on the whole sale market. You do this by calling someone who’s in the game and asking them, asking other investors, or by using this formula…yeah I got cheat sheets for everything…time is money and I don’t waste my time. 

The formula is this….let’s use the $100,000 house. We know the after repair value, the property’s tax bill, and the repair cost so now let’s do some math. Let’s say the tax bill is 2% of the ARV per year so that’s around 2k per year and we’re 3 years behind, so that’s $6,000 in taxes that will have to be paid. We’re gonna give the homeowner $5,000. We have $50,000 to play with, I like to give them 10% of that, which is $5,000. But if they buck at that, I can go all the way up to 50% which is $25,000. But it’s very rare I go above 20%, because remember we have to sell this house. 

Ok, so we have $5k purchase price, $6k tax bill, and about $750 for a closing attorney. (If your new to real estate I recommend find you a cheap local closing attorney to close your deals. I close my own deals, after a while I’m the game you’ll learn how to do yours also) so we’re $12,000 in the hole on this property meaning our cost. Remember that $50,000 max price we came up with using the 70% rule? Yeah, that’s all yours😁 hold up….don’t get to excited we still have to sell this bad boy. So we have $38,000 coming to us right($50,000 -$12,000=$38,000), and that’s our negotiating room. Ok this is what you do to sell this boy…

When I started real estate actually going out and networking was a must. You had to join groups who met once a month or week and actually go sit down to learn. You know making a million dollars is nothing…making your first million dollars means something that first time because once you’ve done it you can always do it again. Making a million dollars is the easy part….KEEPING that million dollars is the hard part. Doing real estate will get you that million dollars, but your NETWORK of people will keep that million dollars. That’s the most important thing to have in this game, not the properties themselves, but a network of people. 

Look listen, no matter where I’m at in the world I can find, buy, REHAB, and sell a house anywhere in the USA all with a handful of calls. That’s because of my NETWORK of people I’ve grown over 15yrs of doing this. I have a list of bankers, attorneys, hard money lenders, bird dogs(people who bring me deals), contractors, every kind of person I need to get and move a house all across the United States. 

So as you progress in this game grow your network. Build some soild relationships with people. Because ultimately you’ll be able to do real estate without even seeing a house all through your network. 

But back on the main subject, today you don’t have to physically go meet people, just use the Internet! There are so many sites where people like me look for deals and opportunities to grow our “birds dog” network. Bird dogs are people who put deals together and wholesale to a investor like myself. Keeps me focusing on what makes me money, which ain’t me physically doing deals. It’s a win win…you make money doing the leg work for the deal no matter how you put it together. So it’s a lot of websites with investors to sell your deals to. Amercavestadvantage.com is the one I use the most. 

So there you have it…I know y’all got more questions..if so just comments below and I’ll try to answer them in a timely manner. 

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