The Personal Finance Podcast - 5 Ways to Buy Real Estate With Low to No Money Down!

Episode Date: July 24, 2023

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Call 16-531-2600 or visitconnectsont.ca. On this episode of the Personal Finance Podcast, five ways to buy real estate with low to no money down. What's up, everybody, and welcome to the personal finance podcast. I'm your host, Andrew Fowder of Mastermoney.com. And today on the Personal Finance Podcast, we're going to talk about five different ways that you can buy real estate with low to no money down. If you guys have any questions, make sure to hit us up on socials at Master Money Co. Instagram, TikTok, or Twitter. And you can follow us on Spotify, Apple Podcasts, or whatever podcast player, you love listening to

this podcast on right now. And if you want to help out the show, leave a five-star rating and review on Apple Podcast, Spotify, or your favorite podcast player. Now, if you're watching on YouTube as well, we create visuals all the time on YouTube. You can check us out on YouTube at Andrew Jincola, which is our YouTube channel for all things, personal finance, money, investing, all those different things. today, we are going to be talking about five different ways that you are going to be able to invest in real estate with low to no money down.

And real estate investing is truly a creative endeavor. And I'm going to show you some really creative ways that you can find properties. But in addition, I'm going to show you that you don't need a ton of money to get started in real estate. In fact, if you have more time than money, that could be a situation where you could be really beneficial to somebody else who may already have the money, but they have less time. So today we're going to be going through all these different ways that you can actually go out and invest in real estate. Now, why real estate? Why are we even talking about real estate

so much on the personal finance podcast? Well, within real estate, I do think that you can reach financial independence even faster with real estate if you do the calculations correctly, meaning learning how to run your numbers, which is the most important factor that you need to nail down when it comes to real estate investing, is running your numbers. Because if you run your numbers wrong, if you go into that deal wrong, then you will never make money throughout the entire time that you own that property. You make all of your money in real estate when you buy the property. And so making sure you know how to run those numbers is very, very important.

So if you're looking to get into real estate, that's the number one skill that I would focus on first. Then once you have a handle of this, you're going to be able to go out and find properties. And having the skill of finding properties is what we're going to talk about today. I'm going to show you five different ways that you can find those properties. And I do believe accelerating your path to financial independence can be done through real estate. It can be done even fast. We've had guests on this podcast talking about why there's a number of different reasons why. But if you can replace your income with that cash flow, you can utilize

things like leverage or other people's money so that you can get to that point where you can get to financial freedom with real estate. If you don't make a lot of money, real estate may be a great option for you, which is why we're doing this episode to get there faster because there are so many different creative options for you that are going to help you propel yourself within 10 years or less to being financially free. And financial freedom is the key for all of us. Now, one caveat to this, before I dive in, is that real estate is not for everybody. In fact, real estate is probably the least passive way to investor dollars. Now, passive income is obviously a spectrum where the most passive way of all is index funds and ETFs, which is why we love index funds and ETFs because you get an

amazing return and you get completely passive investing. Real estate is probably somewhere in the middle of that spectrum. People have said in the past, I've never gotten a call in the middle of the night or anything like that. Well, when I manage my own properties, I've gotten calls in the middle of the night that someone's plumbing is having issues or all these different types of things. It is not passive. You have to manage your tenants in order to make sure that your properties are being taken care of and they're being run properly. Now, sure, you can get a property manager. But if you get a property manager, what's going to happen is you still have to manage the property manager and they're not going to take care of your property as well as you would

if you were the full-time manager. So I am very pro property managers, but you've got to manage the property manager. So it's still not a passive endeavor whatsoever. So, that is one caveat that I want to talk about up front because if you're not interested in managing people at all, then real estate may not be your best option. Your best option is looking at more passive endeavors like investing your money in retirement accounts, which we absolutely love. We are also adding a section in the stairway to wealth as to when you can invest in real estate if you want to on the 3.0 version of the stairway to wealth. Really, really excited about that. That'll be coming out sometime this year. So make sure you check that out as you get

to that point in time. So without further ado, we're going to dive into this. Let's get into the five ways to buy real estate with low to no money down. All right. So the first one is buying properties subject two. Now investing in subject two is a type of thing where the person who is buying a property is actually taking over ownership of an existing loan that somebody already has. Now you may be saying to yourself, well, why would anybody ever want to do that? Why would anybody ever want to give me their loan that they already have available to them? Well, there is a number of reasons why this actually helps out a seller. And what the big thing I want you to understand as we go through this episode is what you want to do when you buy real estate is you want to find

problems and be able to solve problems for other people. That's all investing in real estate is. If you want to find good deals, all you're doing is you're solving problems for other people. This is a very important key that you need to understand when you go into deals. So the first step, if you want to find a property subject to, you want to make sure that you can find a motivated And so this is something where there could be somebody who is struggling to make the payments, for example. Maybe they didn't listen to the personal finance podcast and know that you need to spend 30% or less of your income in order to be able to afford a house. There's a lot of people who are underwater out there in their houses right now because they did not buy their property right. And so what this is going to help you do is you're going to be able to help somebody out by taking over their payments for them when they're struggling.

And there's a lot of creative ways to structure these deals. It doesn't have to be just taking over the payments. maybe they get no benefit out of that whatsoever. Well, you can still pay them X amount of dollars as a down payment in addition to taking over the payments and see if that cash flow, as long as the numbers work, it's going to work for you and you can do a win-win situation here. Now, the key here is, I want you to understand.

This is not something where we are out looking to take advantage of someone. That is absolutely the wrong idea here. What we are looking to do is make sure that we are helping other people out and making this a win-win situation here. So why would somebody want to give over their payments to you? a number of different reasons. One of the main ones out there is to avoid foreclosure. A lot of people can't make their payments anymore. Maybe their payments are too large. They lost a job. The house is just too big for them now and they cannot afford to make the payments anymore.

Well, imagine if you could help somebody out by taking over those payments for them and relieving them of that big, giant burden that is always lingering over their head. So one thing that you can do is you can go out there and you can run lists of people who are in pre-foreclosure. Pre-foreclosure, meaning people haven't paid for the last couple of months. on their mortgage and there are lists out there that you can get where you can pick this up. CREC-C-C is one place that you can do this. PropStream is another place where you can do this and you can pull these lists of people who are in pre-foreclosure. Even Zillow has lists of people who are in pre-foreclosure now.

But this is going to allow you to find a number of different people. And then what you can do is you can run specific searches to find their phone numbers or anything like that. You can start dialing them. You can start sending them letters if you want to and seeing, hey, how can I help you out with this situation? even if you can help somebody out and maybe you don't even get the property. A lot of times if you help people out, good things are going to happen because of that.

And if they know you're a real estate investor, maybe they have friends in the same situation. A lot of things will help there. Number two is if somebody is in this situation, they are extremely financially stressed. You can help them relieve that financial stress by taking over via subject too. Now, another thing, a lot of people really need a fast transaction. So I've seen situations where people are moving in the next week or two. They got off for a job at a way higher rate. and maybe they bought a house last year and they have no equity in that house.

Well, what you can do, if they need a really fast closing, a really fast transaction is you can come into play and say, hey, I'll take over these mortgage payments for the property. There's no equity in this property. So you just hand it over to me. I will take over these payments so that you can go move on and not have to worry about this situation anymore. This could be a really fast closing where you don't have to have a lot of money whatsoever. All you're going to pay is the closing cost, which could be $2,000, and now you own this

property and you took over these payments because somebody else had no way. equity there and they need to move or they need to do whatever else they needed to do. Also, if somebody has no equity or they have negative equity, this is actually a better situation for them than selling the property. If they have to go out and sell the property, what's going to happen here is they're going to take a loss on this, but they would take zero loss if you take over those payments. So this is a great time right now, for example, where property values are shaky in some areas. And if they dropped lower than they were last year when everything was so crazy, you can take over this situation and say, hey, you will actually not lose any money whatsoever. In fact,

I will pay the closing costs here. You don't have to pay a real estate agent, which would cost you thousands and thousands of dollars. I'm going to take over the closing costs. And I'm going to make this a fast transaction for you. This is a win-win situation for somebody who needs to get out of this house. They need to go do something else. That is definitely a win-win situation. The next pro for that seller is that they avoid repair costs. If the house needs repairs, you're going to take that on because you're going to be the new owner and they can avoid those repair costs. Now, if you cannot afford to repair something in the house, you can have a negotiation here where maybe they repair it before closing, and if they can repair that before closing, then you have a deal. So that's another

negotiation tactic that you can use when you get to that point in time. So these are all different situations where you can think through subject to is a great situation. You can have minimal to no money down and be able to take over a property. Now, how do you find those? Like we just said, you are going to find that property by doing that specific search. So you're going to look for a search. Maybe it's pre-foreclosure is a great one to start with. Maybe pre-foreclosure of people who live out of state is another great one. You can look for people who are out of state with equity. That is another great one to look at if you want to find a couple of deals. And then go through and look for those properties. You can use PropStream, like I said. C is another one, C-R-E-X-Y. There's a couple of great places, but you can look for real estate list there.

Propstream, I think, is probably the cheapest one out there that I've seen. and it is one that we use in our real estate business. Now, what is a step by step on how to do this? Maybe you're thinking, okay, this sounds really good. I want to go out and start doing this. I'm going to start searching for these properties. What if I get one under contract? What do I need to do?

So the first thing you've got to do is obviously negotiate the deal. And real estate is a creative game. So your negotiation can be anything you want in there. You can put anything inside of that contract to make it creative. Then what you're going to do is you're going to perform that due diligence. So you're going to get a contract for subject to and you're going to put it into place. Pace Morby is someone who's an expert. and subject to you, you could follow him on social media, things like that. I think he's going to come on

this podcast also. But Pace Morby is someone who has, he actually gives out his subject to contract. So if you want to look at one, he's got one there available to you that you can take advantage of. Then you're going to perform the due diligence. So when you perform due diligence, this is something where you're going to look through, maybe you want to get an inspector involved. I would highly recommend that you have an inspection on every single property that you're going to buy. So when you do this due diligence, you're going to go through the process of having the inspector go through the property. If there's a lot of damage there, maybe the roof needs to be replaced in a year or so, then you can negotiate that off the price at that point in time and or if this is a really

good deal, you don't want to scare away the seller, then you take on that roof issue and you're going to replace the roof and just run it within your numbers as you go through that process. Then you're going to close the deal. So you're going to go to a title company. You're going to put all this together. Take it to your local title company, whichever one you want to use, and they are going to go through look for liens. They're going to look for anything else for you. They're going to do lien searches. And then you're going to close the deal. And they can close very quickly at title companies, so you don't have to worry too much about that. And then you're going to take over the payments. So you just want to make sure that the title company is transferring everything

through the bank to you, the buyer, and you're going to do all this process to make sure that the new payments are now going to you, the transferred over to you. So that is the quick step by step on exactly how you can do this. Now let's jump into number two. There's something about this time of year that makes you slow down a little. More time outside, more time with family, and maybe a trip or two planned. And in those moments, you start to think this is what it's all about. But it also makes you think about protecting it, making sure the life you're building,

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way to buy almost anything out there when it comes to assets. And number two is seller financing. Now, if you've never heard of seller financing before, this is a different type of transaction where you're going to go and find a motivated seller. And when you find that motivated seller, you're going to ask them, hey, would you be interested in seller financing? And here's exactly what it is. The seller becomes the bank instead of you having to go to a bank and taking out a bank loan. Why is this beneficial for you for a number of reasons? First of all, the bank does not have to pull your credit. You don't have to go through the 30-day process to be able to even close a loan. You don't have to give them all these different documents. Instead, the seller becomes the bank. And this is really, really helpful for you because most banks

will not lend to someone for 10 properties or more. So if you're in a situation where you're really getting aggressive with real estate, you want to own 20, 30, 40, 50 properties or you want to own hundreds of properties, you run into a roadblock on lending if you get too many bank loaned properties, especially early on. You can't have more than 10. Most banks don't want to lend you more than 10. If you find one that wants to lend you more than 10, holl out your boy and let me know because I would love to use them. But at the same time, for most situations, you cannot find banks that will lend you more than 10 properties. Now, a hack to this is if you're married, you can have 10 and your spouse can have 10, but sometimes it's hard to get qualified for that eighth, ninth,

and 10th one if you have a ton of debt. And I really want you having tons and tons of debt when it comes to some of these things, especially right now when we have no idea what the market's going to do in the future. So seller financing is a great option for this. Now, when you find these motivated sellers, there's a bunch of awesome reasons why a seller would want to do seller financing. And in fact, I can give you a complete example here first before I go to through all these other reasons. So there is one recently that I was helping my brother-in-law look at, and he was looking for a property to live in for himself. And the person who is taking over this property, their parents passed away, and they got this big house in a specific area that they do not want anymore.

And so this woman is in her 60s, and she's trying to figure out what to do with this house. So you can either find a cash buyer who can buy this house really quickly because it needs a lot of repairs inside of this house. And so if she finds a cash buyer, it needs a new roof, and it needs all new cosmetic repairs inside. The inside looks like a time portal for the 1980s. But it's a really nice area and a really nice house. It's in a golf course community, really, really nice area. So in this situation, this lady also does not have any retirement savings whatsoever. So here is the amazing thing about if you do seller financing. For her, this is an amazing win because if she's willing to do it, she's going to become the bank. And what happens is when

she becomes the bank, she also earns interest on this sale, meaning she is making hundreds of thousands of dollars more on this transaction just by taking over the payments. Here's why this is cool. So say, for example, this house, if they agreed on it to be $400,000, that's kind of the range they were looking at, $375,000, $400,000 in this area. If they agreed on it to be $400,000, and he took those payments and made them for 30 years, she would make an additional $250,000 on the sale of that house at a 6% interest rate. This is a very, very powerful way for someone who has no retirement income to all of a sudden get retirement income because he's making payments every single month that are $1,800 per month. And so she's getting an additional $1,800 plus her

Social Security to have the opportunity to be able to actually retire and not have to work anymore. And at the same time, he's getting the benefit of not having go to a bank and he can do seller financing on this deal so he can use his additional cash to fix up the house. This is a situation where seller financing is absolutely amazing. The same thing goes for if you're going to buy something like a boring business. We had Cody Sanchez on this podcast, and she said her number one favorite way to go buy a business is with seller financing. And I can give you an example of that as well. We were looking at a car wash a couple years back, and we did not actually finish the transaction about a week beforehand. A bunch of things happened that made it fall through. But we had a car wash

under contract with a seller who was an elderly couple who wanted to retire, and we were doing a seller financing deal with them. We were going to buy the car wash and give them interest every single month. And over the course of that time frame, the price we were paying for the car wash, they were actually going to make another 40% on the price we were paying because of the interest payments over that time frame. So it's a very big win for sellers if you can learn how to actually explain how this works to them because most people are not familiar with seller financing. So knowing the lingo, knowing how to talk to people and knowing how to sell this the right way, to show them, this is a true win for sellers. And most people don't position it this way,

especially in today's interest rate environment. Back in the day when interest was two or three percent, it's much less of a win than it is right now because the payments are $1,000 more if you agree on a 5 or 6 percent interest rate, for example, the payments are going to be much, much higher than they would be back then. So a reason why somebody would want to be interested in seller financing, that is one of the biggest ones is that your payments are going to be more. Also, if somebody's trying to sell a house and they offer seller financing, you can attract a lot more buyers who may be interested in that house. Now, one thing a seller might ask you is, hey, well, what happens if somebody doesn't make their payments? That's one thing. A lot of people

get nervous about because now they're still responsible for this house. If somebody does not make their payments and the seller can actually foreclose on them and get the house back, so the house is the collateral in this whole transaction, just like a bank would be. They are exactly the same thing as a bank and there are title companies who will help them close on this stuff. I mean, it is a very, very typical thing to do and it's very, very easy. So they're going to get a higher selling price because of that interest rate. A lot of times you can get a higher selling price and you can get an interest on there. So why would they get a higher selling price? Well, let's look at this, for example, because you can make the payments each month,

whatever the heck you want them to be. So say, for example, that they think their house is worth $500,000, and you know for a fact it's only worth $425, but they are emotional about this house. Well, you can reduce those payments down to payments of a $425,000 loan and stretch that loan out, or you can make a balloon payment by the end of this loan in order to pay it in a lump sum to that seller.

There's so many creative things that you can do here. This is why I get so excited structuring real estate deals because it's so fun to get creative with this stuff to make it work for somebody. Somebody's going to tell you, hey, here's my problems, here's the things that I need done, and then you solve those problems for them. Do you see why I'm saying that over and over again? Because all you're doing is solving people's problems. And that is how you're going to close on these deals, because most people in the real estate industry,

speaking of real estate agents, no offense to a lot of real estate agents out there. I have my real estate license in Florida. I just use it for investing in rentals. But I know a lot of real estate agents because I have my real estate license. and a lot of them don't know how to structure these deals. So if you can solve these problems for people, then you'll be able to do this in an amazing way. It also gives them that steady income stream that we're talking about.

It also gives them tax benefits because it can spread the tax liability over the course of 30 years. They have security because if you default on the property, they get the property back and they get to keep those payments that you already paid them. And it's a great retirement strategy for a lot of people. Listen, the house that I'm living in now, if I decide I don't want to live in this house anymore

and I'm in retirement age where I'm just not going to work anymore, I am going to sell or finance this house, especially at the interest rates now. If the interest rates are really low, I will not do that. But I will definitely be doing that if interest rates are anywhere in the 5 to 8% range, because I'm making 5 to 8% on the money on this house. And it just depends on how much appreciates, but I'd rather make that cash flow every single month with that interest

than I would selling it at that price. And in fact, my goal would be to sell her at a higher price than I would on the MLS. And then I would also make that interest. This is a very, very cool creative way to have additional income in retirement. So you can even think about doing this if you are getting closer to that time frame. Now, how would you do this? How would you do this step by step? How would you go through this process if you find a motivated seller?

So you're going to negotiate the terms, like we said, sometimes seller financing deals are going to be shorter terms. So if your terms are shorter, if they want it to be shorter, you could do five, 10 year loans with a balloon payment at the end. You could do five, 10 year loans on however long you want to do. For example, the one where we were buying that car wash, for example, that was a shorter term loan. It was only a 10-year loan. The price of it was much less than a house. But at the same time, we were looking to do that over the course of 10 years. Then you're going to draft a promissory note.

Now, the way to do a promissory note is I would have legal attorney draft this up for you, have it ready for you so you have a promissory note in place. And then you can go and do that. That's just basically the contract that's available between the two of you. Then you're going to secure the loan with a mortgage or deed of trust. This is another legal document. And you can work with a lawyer who's special. in seller financing. Every location has that. You can Google search or get some recommendations

and referrals and interview a couple of them. Then you're going to go to closing and you can do this with title. Whoever the seller wants to have for title, you could go through that process and or you could find the title company if they don't want to do that. And then if they do have shorter terms, here's how you handle that, just so you understand this. If they have shorter terms to five to 10 years, maybe you're paying it off for the next five or 10 years, then once year nine or 10 comes up, you're going to go to a bank and say, hey, can you finance this property for me? It is cash flowing. Here are the numbers. Here's everything that's going on here. And then the bank is going to pay off the seller. And with the difference that you already pay down the seller, that's

your equity that's available to you. So this is another way where if they want shorter terms, maybe they're elderly and they're 70 years old and they don't want to have a loan for 30 years. That's very understandable. So if that's the situation here, maybe they're elderly, they're 70 or 80 years old and they don't want to have a loan for 30 years because they don't feel like they're going to live as long to have that time frame to be able to pay off that loan. Then this is a great situation for you because then all you have to do is just shorten those loan terms, make the payments and say, we'll give you a big lump sum at the end. I'll go refinance with a bank. No problem whatsoever. We'll put this in the contract so you can see this in writing. And however long you want us to

do this deal, we can do that for. That buys you time to figure out exactly what you want to do with the property and then go from there. So seller financing is an amazing way to do this. I hope you guys learned a ton about seller financing on this one. Now let's jump into number three. All right. So number three is actually finding private money lenders. So I am doing a deal right now with a private money lender. And the way that we are doing this is I have structured it with this lender to be able to have a one year term on this because I needed to close really, really quickly. So private money lenders a lot of times can close really, really quickly. And so my interest rate is going to be a little bit higher on this property than I'm buying. But at the same time,

what we are going to be doing is then refinancing that property in about six months to a year once we have that property fixed up. Now, you could think of this. A lot of people call this the Burr strategy. That's one way that you can do this. Or you can do this a number of different ways. Now, there are all different kinds of private money lenders. And if you listen to the episode we had about a year and a half ago with Ryan Paneda, he was talking through this where he said there is money everywhere. There is always people looking to lend out money. You just have to go out and find them. So the way to find these folks is, number one, go out in network with people. real estate meetings, you know, I always talk about those. Every real estate investing episode,

real estate meetings are really powerful. So go look for your local real estate meetup or you can network with other private lenders and Google them and start talking to them and start going through that process. There's also online platforms. So you can look for some online platforms like Prosper, Lending Club may even do this. I've never gone through that process, but that is one other option. Now, you can also go out there and look for a broker or a middle person who is going to be out there looking for lenders for you and they're going to collect a fee from either you or the and you can negotiate it where they go and do the fee from the lender. But this is going to help you go through that process to find a private investor and then

advertisements. You can run ads to find them as well. Now, why is this beneficial for you? Because, again, you're not going out and getting those additional bank loans. And private money lenders are willing to be flexible and be creative when it comes to negotiating this process. This is also very, very beneficial for you if the property needs a lot of repairs. If you're a flipper and you're looking to flip properties, then you're going to go need

to find hard money lenders, which are really very beneficial for you. way higher interest rates, but if you do that, they are willing to lend on these properties for higher interest rates for short periods of time because banks are not going to be willing to lend on a property when it needs a new roof and all these other things if you don't have the right paperwork involved. So private lending lenders are perfect for that, especially if you're trying to find deals, deals are found with properties that need repairs. So you got to go through that process. Private money lenders are going to help you and you can negotiate minimal money down so that you can work through this and say, hey, you get your money back. Here's the numbers. I ran the numbers.

You present all the information to them and they decide if they want to lend on you. So that's how that works. But the biggest thing is networking with them and building trust with lenders so that you can actually go out and find private money lenders. Now number four is the way I started investing in real estate. This is the way I started with little to no money when I was really, really young. And I didn't have a ton of money. I had money, but I didn't have a ton of money to be able to buy a bunch of properties. And this is sweat equity partnerships. So what I decided to do was go out and use my time because I had more time than I had money and then go and do a sweat equity. And I really, really am glad I did this, even though when I was doing it, it was somewhat of a

struggle because I had less equity than the partners who were actually funding it, but I was doing all the work. But it ended up being something that was beneficial because I learned so incredibly much. I actually learned about real estate by doing it instead of just reading it in books, even though I started off reading it in books. But I learned by doing it, which you're going to learn so much more just by buying properties. And then I was able to kind of go, to real estate college essentially by running this real estate company. So within these sweat equity partnerships, this is how it works. Is one person does all the work. They go find the properties. They do all the closing process and due diligence. They run the numbers on the properties.

They present it to their partners. The partner say yes or no. Then the partners fund the property. And then the sweat equity partner goes back and then they manage the properties. So that's exactly how these work. You can go and negotiate a deal with the partners to have a property manager. But a lot of times you're going to say, why do we need a property manager? And we have you. So this is one thing where you can figure out how to negotiate this and go through that entire process. But if you want to do this, there's a number of different ways to do this. And you could do this with multiple different partners and or you can do it with just one single group who has a ton of money and who pulls together money for this kind of stuff.

So the ways to do this is first you got to show them your skills and identify your skills. So if you've never done this before, you say, hey, let's do a test run or two of a couple different properties. And if you're happy with the outcomes, then we can move forward with that. And then you want to go out and you want to find a partner. who may have more money than they have time, who wants to invest their money in real estate and still own physical properties.

They want to see the numbers come in, but they don't want to do all the work. That's the perfect situation for that. So you can ask friends or family. If they know anybody who is interested in this, go to real estate meetups and say, hey, if anybody is interested in having a sweat equity partner, a lot of those guys who have been doing a long time do

because the only thing they invest in is real estate and they are getting worn down. They don't want to manage properties anymore. You're the perfect solution for that. You're solving other people's problems. Remember, you're always solving other people's problems. whether it's a seller or an investor, you're solving other people's problems. And so this is a way where you can do this. Then you go through and once you find the partner, then you negotiate the

partnership. Now, this percentage, this is a big deal for you because the negotiation side of the percentage is going to dictate how much of a cut you obviously get if you sell these properties and or of the cash flow of the real estate. At the end of the year, your K1 is going to say, hey, they own X percentage. Here's how much they get. This is really, really important for you. What is a good sweat equity partnership deal? It depends on the person. I've seen it as low as 2080 for the sweat equity being 20 and 80% for the cash partners all the way up. You can go 4060, 50, 50, 50, or you can reverse it. It just depends on who you're partnering with and how they want to structure these deals. So everybody wants to make the return. Everybody wants to make money in this deal. So you've got to

figure out what's fair for both sides depending on what you're doing. Because obviously, you would not be able to invest in this real estate without their money. So this would not be happening without you and then the deals would not be coming in without you going and finding those deals. But here's the thing. In this scenario, if you are the sweat equity partner, you have to remember if they start getting heated on this negotiation, you have to remember you are replaceable. They can go find somebody else who could be a sweat equity partner because they have the most important thing, which is the money. So you got to remember that as you go through this negotiation. Do not get too greedy in this negotiation. I would obviously try to get as close to 50-50 as you

possibly could, but just do not get too greedy or you can negotiate something where, hey, if we buy X amount You pay me a salary for doing this. And in addition, the differential and percentage would be the amount of money that we would be making together. And then once you get that together, you put together a formal agreement so that everybody's on the same page. And then you get to work. You start working through this stuff and then distribute profits at the end of the year.

So that's exactly how you would do that. That sweat equity partnership. Great idea if you have more time than money. If you're young, this is an amazing thing for you. Or at any point in time, if you have more time than money, maybe you work 30 or 40 hours a week and you still have those additional hours of nights and weekends to be able to do this. You can do this in nights and weekends. And so that is something where you can definitely have those sweat equity partnerships. Now, the last one. Number five is a fun one for folks who may be out there

and they don't want to look for partners. They don't want to look for motivated sellers or find private financing is you can do a house hack with an FHA loan. Now, if you don't know what house hacking is, this is where you buy a duplex, a triplex, or a fourplex, and you live in one unit, and then you rent out the other unit. And so your mortgage payments are either $0 or $1 or very small or you're actually making money every single month. And so when you do a house hack, one thing that you can do if the numbers work, this matters if the numbers work or not, is you can do something like an FHA loan or you can do a loan down payment and house hack that house. And then all of a sudden you have a two, three or four unit property for minimal down.

And your cash on cash return, mean an amount of money that your money is making is going to be very, very high because you did this as long as the numbers work. So you got to be willing to live in one unit and renting out the other. You have to live there in order to get those types of loans. But if you live there, you get really, really good loan terms. So if you're young or you're a family who's willing to house hack into something like a duplex, triplex, or quadplex, this is a great solution for a lot of people who want to get started in real estate investing because you can do that, live there for a year or two, and then move out to the next one and do it over and over and over again as many times as you want to do this. So this is another great way, low to no money down.

where you use one set of capital and you get in a bunch of different houses over and over and over again because once that cash flow accumulates to enough to allow you to buy the next property, then you just do it again and again and again. There's a lot of really, really great loans out there for folks who are actually going to live in the property to have low down payments. So I have no problem with you, especially with rental properties or your first residents to have less than 20% down. I think it is a lot to ask somebody to have 20% down on their first house. Sure, you can avoid PMI, but a lot of times I would just rather pay off that P&S. am I and then have the difference there available to you because I didn't put 20% down on my first

house. So this is something where you definitely want to make sure that you understand how this works. You know how to run the numbers. And we have an entire episode on how to run the numbers. If you have not heard that episode, I would definitely check that out. And we will probably do an entire 60 minute workshop on this on how to run the numbers and we'll do a video on it. And it'll be on mastermoney.com. So we will let you guys know when that comes out when we do that session on how to run the numbers. Listen, I hope you guys learned a ton about how to buy properties with low to no money down. If you guys have any questions,

please feel free to reach out to me. I'm always, always here for you. And I want to make sure that we provide as much value as we possibly can to you in this podcast. That's the entire goal of this podcast is to give you as much value as we possibly can so that you can build

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