Episode 088: Buy Real Estate Without Using Your Own Money

Hey, guys. Welcome to the REI  Network podcast with me, Gavin Timms. Hey, guys, how are you doing, Gavin Timms with REI Network. Welcome back for another episode. Just before we get going here real quick, if you haven’t already, if you want any of my contracts and my downloads, my lead sheets go to REI network dot com slash downloads. REI Network dot com slash downloads. Make sure you do that. And also, as always, give me a like, subscribe. I really appreciate it. Share this with anybody that you think might see value in any of my episodes that I do. 

But today I’m going to be talking about buying real estate with actually without using your own money, which is really important. I think as we go into this business, people say you don’t need your own money, you can control property without owning it, and then things are all true and I’m going to touch on them. But also what’s true is if you network in the right way and you learn how to build private money, you will also be able to acquire properties without using your own money, which is important, right? Because when I got into real estate, I’m thinking, Well, you need if you’re going to buy a house, you need money to buy it right. You’ve got to have it. You’ve got to build this part. This pile of money of yourself from your W-2 job or whatever it is that you’re working to be able to buy the real estate. And that isn’t true. That isn’t true at all. I’m only talking about ways for you to be able to go and do that and leverage in terms of not only to be able to own real estate, but also the position in the power of your negotiation to actually get contracts signed as well. So let’s start with the basics here and just talk about wholesaling, for instance, or creative finance. When we talk about controlling or owning property, probably more control than maybe owner finance owning without using any of your own money. So what we do is if it’s wholesaling, we find distressed properties that need work. We tie up with a contract. You should always have the ability to close on that deal that would come from private or hard money, which we’re going to talk about. But you can also assign that contract. If you assign it to a cash buyer, use that cash buyers funds and you make the money in the middle. You can also do a double close, OK, where you bring in the buyer brings in the money you close on the property using that funds. Still zero dollars out of your pocket. Or the third thing is you bring in transactional funding. So transactional funding you might have out for 24 to 48 hours. But again, you don’t normally need to bring money to the table. You will borrow that money against the transaction. They will obviously look at the deal, make sure it is a deal and they agree with you. They’ll fund it. You’ll pay one, two percent of the purchase price on that within them two days. Again, leverage in that money. OK, so that’s just controlling it on a on a wholesale deal without using your money. 

Now, obviously, you could say, well, hold on, we need market in dollars, right? Yes. Maybe. There’s two things in this business I talk about a lot this time of money, right? Or both. You cannot be in a position right now and say, I want to get into real estate, but I don’t have any time. I don’t have any money, right? You’ve got to figure out from a mindset standpoint and a schedule standpoint to actually be able to figure out what are you going to be? Something’s got to give. You’ve either got to make more money right and save it, or you’ve got to sort your schedule out and work less because I believe you need one or the other. Now, obviously, this episode is buying real estate without owning it. So let’s go with you don’t have any money, but you have time. 

So even on the marketing basis, you don’t need to spend your money in marketing. If you have that time, you can be networking with wholesalers. That’s how I got started. OK? When I got started, I was networking with wholesalers. I was taking their dead leadsor doing that follow up for them. We were split 50 50 and all I was doing was pounding the phone, talking to as many sellers, making as many offers as I could. And that’s how I started my real estate journey. I did two deals in the first 10 days. 2 deals locked up the closed within that 10 day period on the contract within them 10 days, probably seven. But I’ll give them 10 just because it could have been eight somewhere in that range, and they were the first two deals that I have that I locked up and that was from follow up. They were actually debt 60 dead leads. 

OK, you may have heard the story before, but I called every single one, spoke to about 40 people. We locked two deals and they were my first two deals with zero dollars out of pocket. OK, just time as in networking and then time delivering that. And then I understood that that instilled in me that I could actually do this right. That was the belief that I needed. 

I was that self belief that if I put my mind to, I can achieve anything. And that’s not an arrogance. I would say I’m not arrogant at all. If you’ve met me in person, you see me on video. I’m pretty much the same person, or I’d like to think so, but I do have internal belief that I can out negotiate anyone. I can go into a market and dominate. But they’re internal feelings that don’t come out and say that I’m saying it to you. Well, that’s what I think in my own ability to be able to do something and this could be not just in real estate could be like here’s is a pen. I’m going to tell you about this pen. Now you got to go and sell this pen. I believe that I could do that and I do it through using a lot of reverse psychology, more personal building rapport, talking about like, does the person actually need this pen? Why is this pen going to actually do anything for you and let the pen sell itself if they’re in need of a pen, right? Which is probably the worst thing I could bring up. But if they needed to write something, they don’t have a pen, there’s a high chance I can sell my pen. If they have five and depends on the desk, now it’s going to become a hard sell. And that’s the same with motivated sellers. You can only do business with motivated sellers and people that like you. So that’s that’s the same thing that we do. You have to have multiple conversations where we find, we’re a property solutions company, right, we solve problems. If we can find a problem and we can solve it, then we automatically make money. You cannot go in to a conversation and I know I’m getting off subject here, but I think this is important. I don’t want you to have a go into a conversation trying to go, How do I make money in this deal? And you’re going about it wrong. It’s not about you. It’s never about you. It’s about your sellers. And can you help them? And if they’re not motivated, you can’t help them. So build rapport. Follow back up until you can help them until realization kicks in. And that’s how you’re going to require properties without any money down. 

Now the other option is is what I was going on, how you buy real estate without owning? Well, we have the creative finance, right? Negotiate in taking things over sub-to.You don’t need any money. Taking things over owner finance. Maybe you need to put money down. Maybe not. I have a lot of clients and we’ve done it where you got nothing down zero percent interest because again, you’re solving a problem. But what I want to come on to is, what about the money? The power is in the money. So you guys, well, hold on a minute. You’ve just told us how to acquire a property with no money. But now you’re saying that we need money and that is true, but you don’t need your money. You don’t need the money, you need to find the money because when you have the money, then you have the power. And again, it helps in all areas of business and the negotiation, because now you’re not, you don’t need your 30 day inspection periods, right? If you have a million bucks behind your two million five hundred thousand, one hundred thousand, whatever it may be, you can go, I’m going to buy this. I’m ready to go. You become the buyer. 

So that does something in your mind when it comes to when you know that if I know that I have two million to play with, my negotiation and my clarity in that conversation is very clear that I can take this down and I’m going to buy it. I don’t need to use the other techniques of locking it up and getting contractors in and buyers and partners to look at the deal on all of these things. So it’s going to help in your negotiation. Now, the differences between private money and hard money is private money is people that you will know and network with that have money. They don’t need to know anything about real estate. Anyone with money, family members, brothers, sisters, parents, doctors, lawyers, anyone with money, inherited money. OK, I was out in Savannah last week, the St. Patrick’s Day, and I was talking to a girl actually a bit of a sad story like they were visiting from New Jersey. What do you do? And we were just talking. I said, I’m a real estate investor. And she said, Oh, I’ve actually, you know, I have money. My father passed away and I’ve inherited about half a million dollars and I don’t know what to do with it. And I said, Well, look, I can put it to work for you. And I said, Here’s my YouTube. This is what I do. You know, let’s connect. And if I can show you, I can show you how to get in and use and buy real estate, or I can actually lend it from you. You know, securing first position and actually make money on your money and then choose, Oh, that sounds amazing. So again, network. And when we say, flap your lips and this is on a night out, right? It’s not in a business setting book. Sometimes you never know what you’re going to come across, you know? 

And these are why you need to be having conversations about what you do. I go to the gym, I’m in Phoenix right now. I’m in my RV is as I’m talking, but I’m back in Phoenix for a week. I go to a gym here in Phoenix. It’s pretty expensive to go, kind of just this area. And then we are sitting in the sauna and you’re having a conversation. What do you do? I’m from England. I’m a real estate investor. Oh, really, and this guy went, Oh, I lend money here in Arizona. I’m a hard money guy. Oh, really? OK, well, great to meet you and we know the same people. Again, you start networking. Well, maybe we should do business together and then he’s like, Can you help me find more deals or can you help me find people that want more money to lend to? Yeah. And then I was like, Oh, so if I’ll do that, but what if, then if I need money, you’re going to give me a good rate? Oh, absolutely. So again, it’s just that network in that relationship. As you build that, you need to be doing so always have conversations wherever you go. 

You should be talking to five people a day out, random in the streets, gas stations, OK, whatever it may be about what you do, because that will lead into, Oh, actually, I have a house on my neighbor’s house has been vacant for years. You will find leads by talking to people. All right. We’re not just talking about building lists and on the phone. 

Your network is everything. Again, I called this company REI Network for a reason. I talk about it a lot because I believe networking is everything in this business. Networking with property managers, realtors. OK? The money guys is not hard to find, if you put the time into network and understand people take an interest in people, OK? And once you have that buying power of putting that money to work, because let’s be honest, was it making the bank right now? What is it making in the bank right now for them? Nothing. It’s making no sense if you give them eight percent right and bearing in mind with private money, they will lend normally 100 percent of what you need. Because if I buy a house, I just had one fall out in Savannah. I’ll give you the numbers on it. We’re in it, buying it for 65 grand. We’re going to put 50 in it. It’s probably going to sell for one seventy five. OK, so if I go and borrow money and I say I need ninety five grand or whatever right to give me purchase of one hundred and five, whatever it is to give me purchase and things 100 percent, I’m showing them until they trust me going like, Well, I’m going to be al lin for a hundred five, it’s worth hundred seventy five minimum, may get bet off like if I default, you’re going to have a great property here, right? But obviously my goal is isn’t to default, but sometimes it takes relationships. And then what happens is I have buyers now or I have lenders now that I just write checks, I don’t show them anything. They just say, What do you need? Because we’ve gone through, we’ve done some deals. So, with your private money, you can get it 100 percent, which means then you’re doing your marketing and you have in your conversations your ability to be able to close and be assertive in that will automatically come out because you’re going to be very clear on what you want. You’re going to lock that deal or you’re going to get it funded 100 percent. You’re going to borrow it, you’re going to pay them their eight percent, 10 percent, whatever you’re lending at and then you’re going to go and sell that. You’re going to pay them off, you’re going to pay the debt back to them, plus their interest and then you’re going to have that money. So all of a sudden you just made 50 grand and you had zero money out of your pocket. That is the way to go. Now, sometimes you might say, Well, hold on. What about hard money lenders right now, hard money lenders, you may have to bring down 20 percent, 10 percent down. It’s just the way it is. Well, here’s the other thing if you are someone with some money, but not a lot of money, you can borrow your 10 to 20 percent down at private money. Use the hard money to come in. And then again, you’re still zero out of pocket. So just because someone doesn’t have a hundred grand or a million, doesn’t mean that they aren’t worth it. 

They may have 20 grand doing nothing. 20 grand is enough to get a down payment for you to get in to use your hard money. And then once you’re in that property, what are you going to do? You have options. You sell it, obviously fix and flip it, or you buy and hold. If you do a buy and hold, you want to refi out what you put in to then pay your lender off and then you will have equity. Now there’s the BRRR method, where they’ll go up to 100 to ninety percent. I’m not saying that you shouldn’t do that. I think for me in this market, I wouldn’t. I like to keep at least probably twenty five percent equity in there in case we do have a downturn. Well, that’s just the personal opinion. But I know that I bought, right? So seventy five percent, I know that I can pay my lender back with the all the money back from the purchase. I can pay the rehab and I might be able to squeeze five 10 grand out for myself just to just to say well done. Plus, then I own the property now that I have a mortgage on with a small payment. I have a renter in there where I’m cash floing and then I go on and do it again. So that’s how you’re going to acquire real estate. Normally when people go home to now, now I’ve got no money is because you haven’t raised the money. The power is raising the money once you’ve raised the money again through networking. All right and talking to people, you will come across money and people that have money that you didn’t even know had money. Just put somebody else in. Savannah got. Well, I don’t have a lot. I got 40 grand doing nothing right now and I was like, Well, I can put it to work for, you know? Well, yeah, let’s talk about it then. 

Right. So you can bring in money from like four year, 20 year fifty there to buy a property and do the same thing. And normally you’re going to be lending this out normally three to six months. I put it on it maybe year, depending on what you’re doing, but you can only refi out in three to six months. Hold that property again, pay yourself a little bit, have equity and then go again. And that’s the beauty. Now, I’m not massive into rentals I like AirBNBs where I can actually buy. 

I can 3x, 5x the the income every month. That is my preferred method and I go into high end areas. I just bought this house in Phoenix, seven hundred fifty grand with four hundred grand in, then probably worth nine hundred grand. My mortgage on it is twenty nine hundred. If I had been buying this, I’ll probably get minimum five grand a month. 

OK, so I’ll be cash flowing. I didn’t do this as a business move. I want to live here half the year. So then I’ll just the other time. I’ll just make sure I make money on it. So everyone, it doesn’t matter what you do, as long as it’s making sense for you and what you want. And I do stuff for personal reasons. I have a house in Michigan, Savannah, Phoenix, right? And that’s what I want to do. I’m probably going to get a cabin somewhere. Because I’m like, well, I can use the Airbnb when I’m not in it, and it’s not all about the money, but I’m building equity while I’m pretty much living there for free when I’m there so you can do different things. But I think that’s something that you should definitely look at. OK, so hopefully, guys, this helps. 

Let me know what you think. Do you have any comments, any questions on that? Please put them in the in the chat or below where you’re watching this video and I’ll see you on the next one. All right, guys, have a great day and I will talk to you soon. Bye-bye.