Flipping America 564, Zero Down

By on October 25th, 2022 in Podcast

podcast 564 Zero Down

Opening:

People have been teaching the “no money down” method of real estate investing for many years now. Long before I had heard the name of any real estate teachers I was doing my own version of “no money down” deals. I had bought and sold more than 500 houses – full fix and flip projects before I used a dime of my own money in a deal. Today I’ll tell you how. 

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News and Resources: 

Topic: No Money Down

Is it possible to do real estate investing with none of your own money? Yes it is. I started that way and I prove it still every day. With over 2000 deals done, probably 1500 of them used none of my own money. 

I started this way because I had no money. 

I continued this way because 

  1. I found I could scale our systems beyond my available capital.
  2. I put my money into long-term cash flow. 

So how can it be done? Real estate deals take money, but it doesn’t have to be your money. 

My book: “How to Put Skin in the Game When You’re Running Thin on Skin” is available on Amazon for $3.99. bit.ly/howtoputskininthegame

OR, you can get the ebook as a FREE download by going to flippingamerica.net/skininthegame

There are two components that make up the invested funds of any or every purchased real estate deal. They are debt and equity. Debt is of course borrowed money. Equity refers to the cash in the deal. 

Debt can come from:

Banks and mortgage companies

Hard Money lenders

Private lenders

Sellers (in some cases)

Equity can come from:

Your cash

Your friend’s cash

Your acquaintance’s cash

Total strangers who like the deal and/or your reputation. 

But keep in mind, you may not need to purchase a property in order to control it. Ways to control a property without buying it:

Lease

Option

The real power is to understand how you can use combinations to get a deal funded. It can be:

Creative plus EP

Creative plus PM

HM plus PM

PM plus PM

EP plus EP

EP plus PM

You should consider the position of the money and the associated risk. 

EP money in 1st position is paid out on a 2 to 1 ratio. Example: someone puts up all the money – say 100k. The deal makes 30k. The funder makes 15k. 100% of the investment = 50% of the profit.

EP money in 2nd position (higher risk) is a 1 to 1 ratio. Example: 80k loan in place, EP puts up 20k, which is 20% of investment. Deal makes 30k. Interest is 4k. Remaining profit is 26k. Investor gets 20% or $5200. 20% of the invested amount = 20% of profits. 

2nd position PM lenders should always be paid a higher rate. They have a higher risk. 

So what should you do? First, get my book for FREE flippingamerica.net/skininthegame and take the FREE private money course at bit.ly/privatemoneycourse.

Next start talking to family members and close friends to see who might be willing to back you. At the same time, start cultivating leads for deals. It’s always a balancing act – making sure you have money to do the deals and making sure you have the deals to apply the money you have raised. 

Once you have a good track record this gets easy. Wholesalers will send you their good deals first because they know you can act. Private money investors will be happy with their returns and keep the money coming. 

The hardest thing in this business is to get started. So… Start. 

Questions:

  • Allison, South Bend, IN, “I just love tiny homes. I’m thinking of buying several. It seems like they could be a real cash cow. But what do you think?”
  • Kerry, Columbus, OH, “What is Closing Protection Coverage? I’m getting asked at every closing if I want to buy it. The explanation page makes it sound risky if I don’t buy it. But it also feels a little bit like buying the extra coverage on a rental car. What is it and do I need it?
    • Probably not. Roger’s opinion: it’s insurance in case your title company is incompetent or fraudulent. Most don’t buy it, and the risk is very small – which is why it costs so little. It is not mandated by law to be offered in Ohio. If you have zero risk tolerance, buy it. My opinion – it disincentivizes people from doing their job correctly.  
  • Sammy, Birmingham, AL, “What is Micro-Flipping?” 
  • Jackson, Memphis, TN, “Hello. I’m a college junior majoring in business. I went to a real estate networking meeting a few nights ago and was like whoa, these people are making some real money. Someone told me about your book and show so here I am. This question is probably basic, but what is better, flipping or renting?”
  • Mason, Boulder, CO, “How much does the average house flipper make per year?”
    • According to ZipRecruiter – $75,000
    • According to DoHardMoney – $115,000
    • According to realestateskills.com – $68,000. That’s one flip per year.

Quote of the Day

Today’s Quote from Michael Scott of The Office:

“And I knew exactly what to do. But in a much more real sense, I had no idea what to do.”

Expected Air Date: Monday 10/24/2022

Guest: None

Transcript

[0:00] People have been teaching the no money down method of real estate investing for many years now.
Long before i had heard the name of any of the real estate teachers i was doing my own version of no money down deals.
I had bought and sold more than 500 houses full fix and flip projects before I used a dime of my own money and a deal.

[0:26] Music.

[0:40] The show that teaches you how to make money in real estate wherever you are whatever you’re situation there is an opportunity for you and now
Here’s that flipping America guy Roger Blankenship thank you Kathy Curtis and hello America.

[0:58] You know the expression.
This is the flipping America show all of the show has flipping in the title I don’t encourage everyone listening to drop what you’re doing and start flipping houses like you see on TV.
I do however encourage everyone, everywhere, listening or not.
To include real estate as part of a balance investment portfolio.
I’m gonna talk to you and I’m gonna talk to you about.
There is a way to do real estate and to do expensive fix and flip projects.
With none.

[1:51] If you wanna contact us, we’re on Facebook, Facebook. Com slash Flipping America Media, Twitter, and Instagram at Flipping America.
Slash flipping America. This is relatively new and I need you to go over there please and subscribe and hit that notification bell so you’ll get a little
Notification on your phone whenever we post a new video
Our national comet line is 877 55 Roger that’s (877) 557-6437 press extension one,
You can leave your messenger your question,
Questions add flipping America. Net that’s questions
At Flipping America. Net,
That’s 205858.

[3:00] Which stands for whatever it takes it has the weeks real estate and flipping america news and investing tip a joke
And a blessing. It’s usually about a 7 minute read with some optional links including links to all of the shows and videos that we produced in the previous week.
Shout out to our sponsor today it’s the flipping America mastermind and we are ready to help you get into real estate investing in basically you know be like me,
The flipping America guy.

[3:43] Any news and resources section i’m gonna mention this in my talk a little bit later in the show but we’re gonna give you a free private money course as part of the show today,
And that’s it bit. LY slash private money course.
And I’m also gonna give you my Ebook that sells for 399 in the Kindle version on Amazon how to put skin in the game when you’re running thin on skin,
It’s it follows right along and goes into a lot more detail on topic.
Of today’s show that I’m gonna have time to do on the show today i am gonna give you some of the principles of no money down but.
I am not gonna be able to cover as thoroughly as I do in this little book. It’s 54 pages. You can read it in an afternoon and I think you’ll understand a lot better how to structure the money on your deals.
And you know, we get good feedback from the book.

[4:48] Did I tell you that? Flipping America. Net slash skin in the game. Go to that website, flipping America. Net slash skin in the game,
And you can get this book for free okay.

[4:58] Let’s deal with some questions. We’ve got some really good ones coming in today. Allison from South Bend, Indiana, I just love tiny homes. I’m thinking of buying several. It seems like they could be a real cash cow but what do you think? I’m amused by tiny homes.
Just do.
They’re on wheels you can move them from place to place or
You could also think of it as a super smaller version of a manufactured home just a mobile home maybe they look a little bit nicer maybe they look a little bit less like a mobile home and more like a house a miniature version of the house but really
It is a house on wheels.
Then yeah these things can be a cash cow and you can take these tiny homes and you can take them off the truck and and set them on a foundation attach them to the ground and then they are genuinely real estate and there is a little difference I don’t know.
I don’t really know because I haven’t bought one of these but i don’t believe these are ever titled as a vehicle like a recreational vehicle is so there is that difference but,
The fact is there are many RVs that are bigger than these tiny homes and I’d rather live in one of these RVs.
But that’s just me.

[6:26] People tend to get enamored with whatever is the current fad.
I think that tiny homes are silly i think that the people that live in them are gonna get tired of them and they’re just gonna want more space why is that because for some reason most Americans you know,
Their home is just a place that holds their stuff while they go out to the store and buy more stuff and.
It cracks me up to see the percentage of people who have two car garages but never park a car in the garage because they’re using the garage as storage for all of their excess stuff plus they also pay for storage,
Even more stuff which is why.
If you wanna do this, it’s fine. I I’m not sure how long the tiny home thing is going to be a real thing. I think that you know, manufactured homes have been around for a long time. I believe you can do just as well with them.
And it really all comes down to what it cost you to.

[7:37] Hey I I haven’t seen you in any numbers I don’t know the numbers I haven’t tried to rent a tiny home I know where there are a few tiny home communities around the metro Atlanta area.
And I pass by one on my way to our flip in dothan Alabama and I’ve wanted to pull in there and get a little bit more information but I usually just don’t wanna take the time because.
Well I’ve been that curious about it the thing is Allison it okay have you hammered on a little bit and I’ve picked on it enough so I’m just gonna say.
If the numbers work, the numbers work, and if you can cash flow, you know, two, $300 off of a $50 thousand investment, if something like that, then, I think you’re gonna be fine, and it could be a real cash cow.
Carrie from Columbus Ohio what is
Closing protection coverage I’m getting asked that every closing if I want to buy it the explanation page makes it sound risky if I don’t buy it but it also feels a little bit like buying the extra coverage on a rental car what is it and do I need it.
Okay,
What it is it’s it’s sort of an insurance policy that makes sure that the title company doesn’t run off with your money.

[9:01] Basically.
It’s like a bond. Performance bond. They’re trying to ensure.
Alright if the title company is if if they,
Because their license will be taken away in states that require attorneys for closing they will be disparred,
They will no longer be allowed to construct conduct closings anyone who wants to be in business longer than tomorrow isn’t going to steal.

[9:38] Mistakes can get made.
And i have been at closings where mistakes were made i’ve been a closings where we caught a mistake before we assigned everything but I’ve also been at a couple of closings where we didn’t catch the mistake and we had to
Go back later and correct the mistake and there was an exchange of money. Sometimes money come in my way, sometimes money going the other way.
It’s never been more than, you know, it never been more than a $1000. Usually, it’s not more than a few $100 and it very rarely happens.
Why because there are a lot of incentives for the title companies and for the settlement agents to get it right.

[10:17] I think that this,
Carrie and that’s because State of Ohio has passed north and say it has to be offered at every closing now and the properties we buy in Ohio we’re getting at two and it’s not just Ohio we’re getting we’re getting this from
Anyway it it’s the law in several states that it must be offered but here’s the fact most people don’t buy it.
I don’t want it and i agree with your kind of snarky idea that is like the extra coverage on a rental car you already have title insurance and that ensures against most of the types of perils that are actually a threat and even that,
Is a very small chance that you have a time insurance claim and I say that and I’ve said that for years but we’re in the middle of a situation now,
Where we do have a title insurance claim because we close on a property and they inadvertently close over an ex-husband’s failure to pay back child support or something but we got that settled,
And it it worked out but there’s another form that is often signed at the closing which is a.
And so what you’re saying is if we discover that there’s been an error we’ll come back and fix it.

[11:43] That has been enough I think but to have this bond or this insurance posit here’s the thing.
It’s typically, you know, 40 or 50 dollars which seems well, you know, there’s such a big, real estate deal that’s such a small amount. That’s true. You know why? It’s a small amount. Because the risk is very very small.

[12:05] So, answer your question. If you have oh risk tolerance, buy it.
Here is a little thing to throw in there everybody think about this.

[12:29] Think about that put both of those sentences together and ponder it for a minute lenders that I’m talking about banks and mortgage companies.
Mainly banks. They have oh risk tolerance. They will buy this goofy insurance although the odds of it ever being needed.
I have very small but they have oh risk tolerance.

[12:54] Does that give you an idea or two?

[13:05] Closing protection coverage disincentivizes people from doing their job correctly.

[13:12] We came up with a saying back in the 90s when they started creating more idiot proof products I’m one of the guys in my office just said and I didn’t think of this he said it he said you know what.
The more idiot proof we make products the more idiots the bigger idiots the world’s gonna give us and that has man I’ve I’ve watched that true,
Become true over the last 30 years and I cannot believe.
The colossal stupidity of a lot of people that are claiming to be out there in the professional workplace it is amazing to me.
Weather it’s in the real estate world or whatever.

[13:50] Where for we are.
Share dumbfounded.

[14:13] Yeah, we’re in Atlanta, Georgia. It rarely gets cold enough here to freeze pipes rarely.
And we’re in a high-rise building. There isn’t a single water pipe anywhere in that building on an exterior wall. Everything is well insulated. But here’s what this thing says. It says, winner is coming.
And some of you travel during the winter be sure that you leave your heat at no.
Hire than 72°.

[14:45] No higher than 72 and what does 70 do they even know the freezing point of water do they even know what their let’s see this is what I’m talking about these are people who have never had any incentive to get things right
And so they’ll just say whatever and put that in print and hundreds and hundreds of residents will read that in the elevator and a few people go oh my
No higher than 72 i’m gonna freeze,
Fully half of the residents read that and just laugh. Okay, I gotta move on. Sammy for Birmingham, Alabama, what is micro flipping? Very good question.
Another phrase for something that’s also called Wholetailing that’s W H oh L E dash T A I L I N G,
What it really is?

[15:35] Did you buy a house and you you don’t really do a full rehab modernization you know replace the cabinets in the kitchen countertops and.
Update the bathroom and and you know, mack out the master bedroom closet or maybe remove the center wall, the divides the front of the house and the back of the house. You’d basically just clean it up,
Paint maybe fix whatever is wrong with the floors and your selling something that still looks a little bit dated but it is everything works and it’s livable you may only spin.
810 $1000 on what you do to the property and maybe you don’t get full retail for it but.
You will get it sold and that is micro flipping which is also wholetaling.
Alright. I think that time for one more.
Jackson so Jackson from Memphis, Tennessee. Hello, I’m a college junior majoring in business. I went to a real estate networking meeting a few nights ago and was like, whoa, these people are making some real money. Someone told me about your book and show so here I am. That’s great.
Thank you
This question is probably basic but what is better flipping or renting your ride Jackson that is basic in fact that question is so basic it’s never actually been asked that way before but i will say to you.

[16:54] Just depends. And that’s the question to a lot. That’s the answer to a lot of real estate investing question. It depends on what you want. Now,
Understand this when you’re flipping you’re really not investing in a property what you’re really doing is you’re engaging in a business activity that can can be highly lucrative
But in order to really make your money work for you which is what I think investing is
You’ve got to be owning rental property. So, it depends on your objective Jackson. If you wanna just get out and make some money, flip some houses, and if you have a longer horizon for really seeing profits
Start buying rental houses what I would suggest is you flip some houses and rather than spending their your profit on that on new cars and clothes,
Go out and use your profit on that to buy rental properties and hold on to those rental properties Jackson for the next 30 years and the next 30 or 40 years are gonna go by before you know it.
You will be wealthy. By the time you are 40 if you start doing this now and I’m I’m I’m not talking,
Getting by you will be wealthy you will be worth millions by the time you get to your 40s if you will do this are you listening,
Flip a few houses start buying rental properties get a good paying www job with your college degree and make it happen.

[18:18] Music.

[18:27] Hey are you ready to learn this business for real
Inclusion that all weekend training events for life group coaching calls for life and monthly one on one calls for a full year,
And be a part of my flipping america family for life flipping America. Net forward slash.

[18:58] Is it possible.
Yes it is.
1700 or so full fix and flip projects and probably 1500 of them I used none of my own money,
I started out this way because when I started I had no money.
I continued this way because for a couple reasons. First of all, I found I could scale our systems beyond my available capital no matter how much money I had.
I always could find more deals and we had the capacity to do more deals than i had the money to buy,
So I continue to use other people’s money and number two.
I learned a long time ago to put my own cash into long term cash flow I use other people’s money to generate business income and I use that business income to purchase cash flowing properties
Not saying that’s how it has to be done but that has worked very well for me for many years. So, how can this be done? Real estate deals take money.

[20:12] But here’s the thing that’s magic about real estate. It doesn’t have to be your money. Now, I have a book
It’s on Amazon right now in the Kindle version only I don’t think you can even get the paperback of it it’s how to put skin in the game when you’re running thin on skin
It’s available for 399 and if you wanna just quick link to it rather than looking it up.
You can go to bit. LY slash.

[20:44] Bit. LY slash how to put skin in the game and you can get the book for 399 or.
You can get it free
You go to my website clipping America. Net slash skin in the game
Then,
So you can get the book for 399 on Amazon or you can get it for free just by going to the website and giving me your email address. Okay.
That make up the invested funds of any or every purchase real estate deal.
Okay now listen to these words to compose one of their only two components and you’re gonna use one or both.

[21:40] That’s the invested funds of any and every purchased real estate deal.
Some real estate deals you should be getting the just here that some real estate deals are not purchased
Okay, here are the two components. They are debt and equity. Debt is of course borrowed money. Equity refers to the cash in the deal.
Debt can come from banks or mortgage companies
Investment property it can come from hard money lenders and sometimes hard money lenders are actual institutions and sometimes they are individuals that act like an institution and then there are private lenders which are a little bit more informal
And not institutionalized like a hard money lender. Okay, so you have banks, mortgage companies, hard money lenders, private lenders, and
And some cases believe it or not one of the source of debt can be the seller.

[22:41] That’s a little bit of an advanced strategy that you get into but sometimes you you know you might say to somebody I don’t know what you’re planning to do with,
The money but if you.
Can if we can work out a deal I can give you the full price for your house,
A lot of times they’ll say yes to that,
But it’s outside the scope of this little call today or this conversation today but there are things you can do and there are instances when the sellers themselves can be a lender to you. Alright, now that’s where debt can come from. Equity can come from your own cash.
Or
Your friends cash.
Total strangers who like the deal and or your reputation.

[23:46] Okay it’s gonna be cash but it doesn’t have to be your cash and i gave you those in kind of an order and the order that you should probably take them,
Hey, I don’t know about you but for me,
My first investment came from family
And you know, it’s just an opportunity to sit down and explain to them what you’re trying to do and see if somebody will put up the money,
And we wanna encourage you to know that some of the people in your family have money and they don’t and you don’t know about it because not everyone who has a good bit of money.

[24:32] Her shows it off now.
Along that line I’m gonna give you another free resource today and this one is really good this is well no in it,
Previous one was really good too. These are both really good. This is a private money course and it’s free.
Always free no coupon needed it’s a four lessons I sit down with Dave Debo one of the greatest private money guys in the world he is Canadian but he teaches people how to raise private money and he agreed to do with me a free
Miniature course or small course,
Private money course all lowercase all one word bit. LY slash
Course.
After you started talking to your family and friends to get someone to back you
At the same time your cultivating the the leads for deals. Now, this is always gonna be a balancing act. If you’re gonna use other people’s money.

[25:47] You always are trying to make sure you have the money to do the deals that you commit to and you’re also trying to make sure that you have the deals to apply the money or,
To deploy the money you have raised because if someone commits to you they wanna invest some money with you they want the money,
Doing something, not just sitting in their bank account. So, once you have a good track record, this actually gets easy.

[26:12] Because you’ll be able to move beyond family and friends into a
Acquaintances and then you’ll be able to do like we do it at Flipping America we have total strangers approach us now when we do this there’s a process that we go through we wanna get to know them and we want them to know us we’re not trying to sell them anywhere anything
Because frankly we don’t need their money.
But we do enjoy.

[26:44] See if there’s a good fit and if they’re in, you know, the same half of the country, we try to arrange a way to meet up and talk in person,
So friends and family then acquaintances and then,
Okay. Now, once you have a track record, this is gonna get a lot easier.
Wholesalers will send you,
And private money investors will be happy with their returns and they’ll keep the money coming. After you’ve cultivated some money, you may never have to put money in one of your deals ever again. You could even
Get private money investors to put up the money to buy your rentals and then later on
Refinance those rentals a lot the ber method and possibly cash out.

[27:43] Everything that you’re private investor has put up.
Again, you’ve got cash flowing property with none of your own money in it. The hardest thing in this entire business is.
To get started.

[28:02] My daddy.
The second best time is today.
It’s gonna take some time and it may take some years for you to see the benefit it may take months before you can find that first deal or find that first family member or friend who is willing and has the money to work with you on that first deal,
But once you get the ball rolling then it’s rolling and it’s like a snowball rolling downhill,
Gradually become an avalanche and you’ll be on your way.

[28:42] That’s it for today my friends thank you for joining us so much we appreciate,
All of all of you every listener we appreciate you so much it’s such an honor to sit here behind this microphone and share with you,
Three times a week monday, Wednesday, and Friday and I appreciate so much the reviews. If you haven’t left us a review, please go to Apple Podcast and leave us another five star review.
I like it and and it’s it reviews that are there. All five star and I don’t know any of those people. It’s not like I asked family members or my cousins to go say something nice.
It’s it’s really gratifying and we thank you for that.
And i knew exactly what to do.

[29:33] Wisdom from Michael Scott.

[29:41] You’ve been listening to Flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app free in the app store
Find and follow us on Twitter and Instagram and keep your eyes open.

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