How To Buy Your First Rental Property Even If You're Broke

Summary

In this educational video, Jamelle Gibbs outlines a five-step strategy for acquiring rental properties with minimal capital. He introduces the concept of owner financing, which allows buyers to bypass traditional banks and negotiate directly with property owners. Gibbs provides practical steps, including finding properties, pre-screening sellers, making offers, securing agreements, and finding tenant buyers. His approach emphasizes building wealth through passive income and offers creative solutions for those short on funds or credit.

Takeaways

• 😀 The video teaches a strategy for buying rental properties without significant initial capital, focusing on owner financing as an alternative to traditional bank loans.
• 🏢 Owner financing allows buyers to deal directly with property owners, bypassing banks, and can benefit both parties with tax advantages and passive income.
• 💡 The presenter emphasizes that no significant amount of money is required to start, suggesting that even $10 to $100 could be enough to begin the process.
• 🔍 Finding properties can be done using online platforms like Zillow and Craigslist, focusing on properties listed 'For Sale By Owner' to facilitate direct contact with sellers.
• 📝 Pre-screening sellers involves understanding if they have a mortgage and if they are open to receiving payments over time, using non-threatening language to encourage a positive response.
• 📑 A creative offer formula is suggested, which includes offering close to the asking price, negotiating a small earnest money deposit, and setting a monthly payment based on half the rental comps in the area.
• 🤝 The agreement with the seller typically includes a standard purchase and sale agreement along with a seller financing addendum, which outlines the terms of the deal.
• 👥 Finding a 'tenant buyer' is crucial, who will ultimately take care of the down payment, monthly payments, and balloon payment, enabling the original buyer to profit from the spread.
• 📈 The strategy aims to create passive income through monthly rent collection and potential profits from the back-end sale to the tenant buyer.
• 📊 The presenter suggests increasing the monthly payment by 10-20% based on rental comps and structuring the buyer's payment plan to be shorter than the seller's, creating a no-money-down scenario.
• 🎯 The key to success with this strategy is taking massive action, emphasizing the importance of proactive engagement in the real estate market.

Q & A

What is the main topic of the video?

The main topic of the video is teaching viewers how to buy their first rental property even if they have limited funds or poor credit, using a strategy called owner financing.

Who is Jamelle Gibbs and what does he teach in his videos?

Jamelle Gibbs is the presenter of the video and he teaches various investing strategies, with a focus on wholesaling real estate and creative financing methods for acquiring rental properties.

Why is wholesaling real estate considered a high-paying job but not a path to wealth?

Wholesaling real estate is considered a high-paying job because it can generate significant income quickly. However, it is not a path to wealth because the income is not passive and ceases if one stops working or takes a break from the business.

What is owner financing and how does it benefit both the buyer and the seller?

Owner financing is a method where the property owner acts as the bank and provides financing directly to the buyer, bypassing traditional banks. Benefits for the buyer include no need for a large down payment or good credit, and for the seller, it offers tax benefits and a steady stream of passive income from a property they no longer own.

How can someone with as little as $100 start buying rental properties using the strategy presented in the video?

With as little as $100, a person can make an earnest money deposit to secure a property deal using owner financing. The rest of the down payment and the purchase can be structured with the property owner over time, allowing the buyer to get started with minimal upfront capital.

What role does the property's condition play in the owner financing strategy discussed in the video?

The condition of the property does not play a significant role in the owner financing strategy. Whether the property is in excellent or poor condition, the key is to structure a deal that allows for cash flow and makes sense financially, without the buyer having to invest in rehabbing the property.

How does one find properties suitable for owner financing as described in the video?

One can find suitable properties by using online platforms like Zillow and Craigslist, focusing on 'For Sale By Owner' listings. The video suggests looking for properties with price cuts or those that have been on the market for a long time as potential candidates for owner financing deals.

What is the importance of pre-screening sellers when attempting to set up an owner financing deal?

Pre-screening sellers is crucial to determine if they are willing to accept payments over time and if they have an existing mortgage on the property. It helps to ensure that the seller is a good fit for an owner financing arrangement and sets the stage for a successful deal.

Can you explain the 'creative offer formula' mentioned in the video?

The 'creative offer formula' is a method to structure a deal where the buyer offers the full asking price to the seller but asks for a delayed down payment until closing. The buyer provides a small earnest money deposit and offers monthly payments based on half the rental comps in the area, with a plan for a balloon payment at the end of the agreed term.

What is the purpose of finding a 'tenant buyer' in the context of this real estate strategy?

The purpose of finding a 'tenant buyer' is to create a situation where the buyer rents the property with an option to purchase, effectively covering the seller's payments and down payment while also providing the original buyer with a profit spread. This allows the original buyer to build capital and generate passive income without significant upfront investment.

How does the video suggest getting the earnest money deposit back after making an offer on a property?

The earnest money deposit can be returned to the buyer once the tenant buyer provides their down payment on the property. This creates a no-money-out-of-pocket scenario for the original buyer, as the tenant buyer effectively covers the initial earnest money deposit.

Outlines

00:00

🏘️ Introduction to Buying Rental Properties with Limited Funds

In this introductory paragraph, Jamelle Gibbs outlines a strategy for purchasing rental properties even without significant funds. The speaker emphasizes that wholesaling real estate, while profitable, does not create long-term wealth due to its transactional nature. The proposed alternative involves owner financing, which allows bypassing traditional banks and negotiating directly with property owners. This method is presented as a way to secure properties with minimal upfront investment, thus enabling passive income and long-term wealth creation.

05:01

🔍 Finding Properties for Owner Financing

The speaker provides a step-by-step guide on how to find properties suitable for owner financing, using Zillow as an example. They explain the importance of looking for properties listed 'by owner' and focusing on those with price cuts or that have been on the market for an extended period. The aim is to identify motivated sellers who may be more open to owner financing deals. The method is described as cost-effective, requiring no financial investment but time and effort to search for potential properties.

10:01

📞 Contacting Property Owners and Assessing Their Interest

After identifying potential properties, the speaker discusses the process of contacting property owners directly using platforms like Zillow and Craigslist. They highlight the importance of assessing the property's condition and the seller's willingness to consider owner financing. The speaker also shares a personal script for reaching out to sellers, focusing on the benefits of owner financing for both parties and aiming to pique the seller's interest in a potential deal.

15:02

📝 Pre-Screening Sellers for Owner Financing Eligibility

The paragraph delves into the pre-screening process for sellers to determine their eligibility for owner financing. It involves understanding whether the seller has an existing mortgage and their openness to receiving payments over time. The speaker advises on the use of simplified language to make sellers feel comfortable and shares resources like a property information sheet and a seller script review video to assist viewers in this process.

20:02

📑 Structuring the Creative Offer and Agreement

This paragraph outlines the process of making an offer to the seller using a 'creative offer formula'. The offer typically involves paying close to the asking price with a delayed down payment, a small earnest money deposit, and monthly payments based on half the rental comps in the area. The speaker also discusses the use of a standard purchase and sale agreement along with a seller financing addendum to formalize the deal, emphasizing the importance of using language that encourages seller comfort and agreement.

25:04

👨‍👩‍👧‍👦 Finding Tenant Buyers and Securing the Deal

The final paragraph focuses on finding tenant buyers for the property. The strategy involves advertising the property as an opportunity to buy with minimal down payment and no bank involvement, attracting buyers who are looking for such deals. The speaker explains how to structure the rent-to-own agreement with the tenant buyer, ensuring that the terms are favorable and result in profit for the property owner. The paragraph concludes with the speaker encouraging viewers to take action and apply the strategies discussed to achieve success in real estate investing.

30:05

📢 Conclusion and Call to Action

In the concluding paragraph, the speaker summarizes the process of buying a rental property with limited funds and reiterates the importance of taking action. They encourage viewers to like, subscribe, and turn on notifications for more educational content. The speaker also invites feedback and looks forward to engaging with the audience in future videos, emphasizing the value of continuous learning in real estate investment.

Keywords

💡Rental Property

A rental property refers to real estate that is owned by an individual or company and leased to tenants for use as a residence. In the video's context, the host discusses strategies for purchasing rental properties as a means to generate passive income. The script mentions the process of buying a first rental property and leveraging it to create a monthly cash flow.

💡Wholesaling Real Estate

Wholesaling real estate is a method of making profits by purchasing properties at a low price and quickly reselling them for a higher price without taking title. The video mentions this as a fast way to make money in real estate but contrasts it with building wealth through rental properties, which provide a more sustainable income stream.

💡Passive Income

Passive income is money earned with little to no effort by the recipient, often generated by investments or assets. The video emphasizes the importance of creating passive income through owning rental properties, where the property owner receives monthly payments without active work.

💡Owner Financing

Owner financing is an arrangement where the property seller provides the financing for the buyer, bypassing traditional bank loans. The video describes this method as a way to purchase properties without significant upfront capital or credit requirements, allowing the buyer to pay the seller directly over time.

💡Creative Investing

Creative investing refers to unconventional methods of acquiring or financing real estate that deviate from standard practices. The video presents a creative strategy for buying rental properties with minimal cash, using owner financing and finding tenant buyers to take over the payments.

💡For Sale By Owner (FSBO)

For Sale By Owner is a term used when a property is sold directly by the owner without the services of a real estate agent. The script mentions using FSBO listings to find properties where the owner is more likely to agree to owner financing.

💡Earnest Money Deposit

An earnest money deposit is a sum of money given by the buyer to the seller to show good faith and commitment to the purchase. In the video, the host suggests using a small deposit, even as low as $100, to secure a property deal with the seller.

💡Rental Comps

Rental comps refer to comparable rental properties in the same area that are used to determine the rental value of a property. The video describes using rental comps to set the monthly payment for the seller in an owner-financed deal and for the tenant buyer in a rent-to-own agreement.

💡Balloon Payment

A balloon payment is a large, lump-sum payment made at the end of a loan term, typically after a series of smaller, regular payments. The script explains using a balloon payment as part of the creative offer formula to pay off the property to the seller after a set number of monthly payments.

💡Tenant Buyer

A tenant buyer is a potential property buyer who is currently renting with the option to purchase the property at a later date. The video outlines finding a tenant buyer as a crucial step in the process, where the tenant buyer takes over the payments and eventually buys the property, providing profit to the initial investor.

Highlights

The video shares a strategy for buying rental properties with minimal money, even if you're broke.

Wholesaling real estate is a fast way to make money but doesn't build wealth as it requires continuous hustle.

Wealth is built through passive income, not from hustling for every deal like in wholesaling.

The presenter introduces a strategy combining upfront checks, monthly passive income, and back-end profits.

You can start with as little as $10 to $100, qualifying you to begin the process of buying rental properties.

Traditional methods of buying rental properties involve bank financing and large down payments, but there's an alternative.

Owner financing allows bypassing banks and using the property owner as the bank.

Owner financing benefits both the buyer and seller, providing tax benefits and passive income for the seller.

The video demonstrates how to find properties using Zillow, focusing on properties listed by owners.

Properties with price cuts and longer days on the market are ideal for this strategy.

The presenter shows how to contact property owners directly through Zillow and what message to send them.

The importance of pre-screening sellers to understand their willingness to take payments over time is discussed.

The presenter explains how to make an offer to the seller using a creative offer formula.

The strategy involves offering the full asking price but delaying the down payment until closing.

Finding tenant buyers who can take over the property and payments is crucial for the strategy's success.

The presenter outlines how to close the deal with the tenant buyer, making it a no-money-down deal for the original buyer.

The video concludes with the presenter encouraging viewers to take action and apply the strategies discussed.

Transcripts

in today's video i'm going to share with

you how you can buy your first rental

property

even if you're broke coming up

hey what's up everybody it's jamelle

gibbs welcome to another video

listen on this channel i teach a lot of

different investing strategies

one of them being wholesaling real

estate and the reason why i teach

wholesaling real estate

is primarily because it truly is one of

the fastest ways

to make money in real estate but the

problem with wholesaling real estate is

you're only as good as your last deal

what do i mean by that

well with wholesaling you have to

continue to hustle

in order to find the next check and it

doesn't pay you

over and over and over again which means

if you decide to ever leave the business

go on vacation or you know just

put a pause to your business for quite

some time guess what

you're not going to make any money using

that investment strategy and that's

exactly why i tell people

that wholesaling is a means to an end

yes you can make a lot of money with

wholesaling you can get

rich when you're wholesaling houses but

you never become

wealthy wholesaling houses wealth is

built

when you don't actually have to work for

the money and you receive money every

single month

passively without your personal efforts

or very little

of your personal efforts with

wholesaling you have to continue

hustling in order to make money in

essence it's a high paying job

for yourself so what i want to show you

today is

a simple strategy that you can start

using today

which i feel is just as easy as

wholesaling houses

the difference is you can make some

money up front you can make some money

every month

and you can make some money on the back

end as well

so essentially what you're doing is

you're creating a model where you can

get

wholesale like checks up front you can

get the benefits of owning rental

properties

by collecting passive income every

single month

and you can make huge profits on the

back end

as if you were rehabbing houses so

really you get the best

of all worlds and that's exactly what i

want to show you

today and the great thing about what i'm

going to show you is you don't need a

lot of money

to get started you could have anywhere

between 10

and 100 dollars in your pocket right now

and you qualify at that point

to do exactly what i'm going to show you

today so

if you're looking for that way to build

real wealth

and real estate by owning rental

properties

and you're looking to get your first

rental property going right now

this is the video for you also if you've

been in a business

and you're using traditional ways to buy

rental properties

keep watching this video because i'm

going to reveal something to you

that's going to open your eyes to

another world of real estate investing

where you don't need the money when you

don't need

the credit and you can still reap the

benefits

of owning rental properties so let's go

ahead

and jump right in okay so the first

thing i want to talk about is how it's

even possible

to buy rental properties even if you

were in a position where you didn't have

a lot of money

or you don't have the credit to be able

to do it because

typically the average person who's

looking to buy a rental property

what they're looking to do is go to a

bank to be able to get financing

and then they also think that they need

large down payments in order to be able

to do this as well

so i'm here to dispute all of that and

change your thought process

on how this actually works so the way

you're going to be able to do this

is through a method called owner

financing and just to keep it simple

owner financing is basically

a method that allows you to bypass the

banks to go straight to the owner of the

property

and use them as the bank on the property

so rather than going to the bank

to get a loan or get financed you're

simply going to go to the owner

of the property and have them finance

the property for you

and there's a lot of benefits to doing

this you don't have to run your credit

you don't have to fill out stacks and

stacks of paper with a mortgage company

you don't need a lot of money to do this

so it really doesn't matter

what your personal situation is because

you're going to use the house

the asset to be able to create the deal

through something called owner financing

and this benefits the seller as well

they get tax benefits for doing this

they also

get a monthly passive income on a

property that they no longer own

so there's a lot of benefits to using

this strategy both for

you and the seller creating a true

win-win situation

when you're working your real estate

investing business

now as i've mentioned before you can get

started using this strategy even if you

had as little as a hundred dollars

in your pocket right now but stay with

me until the very end

because even if you put down that

hundred dollars i'm gonna share with you

how to get that hundred dollars back

so you can truly be into the property

with no money

out of pocket keep watching until the

very end so let's go ahead and jump into

step number one

all right so step number one is to find

the properties

and the beautiful part about what i'm

going to show you today is you don't

have to spend a dime

to be able to find these types of deals

the reason for that is because

you're not always looking for the

wholesale like

deals and when we say wholesale like

deals we're talking about the deeply

discounted properties

when you're using owner financing you

can literally

pay top dollar for these properties it

doesn't matter what the condition is

it doesn't matter what the price is if

the owner is financing this property for

you

and you can create a cash flow on this

property and the numbers make sense

then guess what you can buy as many of

these properties as possible

and one way to find these properties is

by using zillow

you could also use craigslist using the

same exact method so i'm gonna show you

exactly how to do that right now let's

go ahead to zillow.com

all right so what we're gonna do is go

to zillow.com

so we're gonna type that into the search

bar and once we get to zillow.com what

we're gonna do is select the city

that we're interested in investing in so

one of the cities that i invest in

is greensboro north carolina so i'm

going to go ahead

and select that now once i select

greensboro north carolina you'll notice

a for sale tab

up in the navigation bar up at the top

so i'm going to go ahead and select that

for sale tab then what i'm going to do

is

select this drop down menu right next to

the for sale tab and when i select that

drop down menu what i want to do is make

sure

that the only thing that's selected is

by owner

and the reason for that is because i'm

looking to work directly with the seller

of the property yes i can find these

deals through agents i could find them

through other means as well i can focus

on foreclosures and things like that

but for the purposes of what we're

focusing on

right now i only want to focus on

working with

private owners so i'm going to make sure

that that's selected

and i'm going to go down to the bottom

and click on done now once i click on

done

i'm going to ignore price i'm going to

ignore beds and baths because this stuff

doesn't matter

i can use this method in any price range

any beds and baths

and also on any type of property as well

but what i am going to do is go ahead

and select more

once i select more what i want to do is

scroll all the way down to the bottom

to where it says days on market and i

want to make sure that that says

any there's a couple of reasons for that

and i'm going to explain what that is in

just a moment

after that i'm going to go ahead and

click on done now the reason why

i want to leave the days on market alone

and i want to do a broad search which is

why i didn't select the price range

beds and baths or home type it's

primarily because

i can buy any type of property using

this method i can buy land

i can buy residential real estate i can

buy commercial real estate

any type of real estate that's available

can fall under the owner finance

category

so that's why i'm looking for pretty

much anything that makes sense

but for the purposes of this particular

video

what we're focusing on is buying your

first residential

rental property so that's exactly what

we're going to focus on

now if you notice some of the labels on

some of these properties

one says price cut and one says days on

market

what we're looking for are the

properties that have these types of

labels

i'm looking for the properties with the

price cuts and i'm looking for

the longest days on market so you can

see that this particular property had a

price cut on december 18th

by 2601 dollars and this particular

property has been on the market for 755

days

but as you can see these two properties

are

land and that's not what i'm looking for

in this particular video what we're

looking for are

residential properties that you can rent

out

to tenants and be able to collect the

monthly cash flow on

so let's see if we can scroll down a

little bit and find some you can see

there's a lot of land here

just scrolling down and what i'm looking

for primarily is a ranch

style home because in this particular

investment area i do very well

with ranches now obviously we buy

colonials and things like that as well

but when it comes to rental properties

ranch style homes

work best for us you got to find out

what rents well

in your area and then stick to that type

of property

because it'll be a lot easier to offset

that property on the back end

so i'm just looking for some properties

here and i notice a couple here so

here's one

on sedgefield lane okay it's been on the

market for 17 hours and what i'm gonna

do is contact

this particular seller and here's

another one they had a price cut

on december 21st you can see for fifteen

hundred dollars so chances are

this person might be interested as well

and i may

also contact this one let's look at the

conditions of some of these properties

and then we'll take it from there so

let's look at the one on

sedgefield first usually i like to focus

on

the longer days on market type of

properties so if it's been on the market

for a while those are the types of homes

that i'm looking for i'm just looking at

the pictures

this looks like a rehab type of property

an investor bought property so someone

actually purchased this house

they rehabbed it and now they're looking

to sell the property so this is probably

not going to be

a good fit for what i'm looking to do

let's go over to the next property so

the next one here

is in greensboro as well

again this has been on the market for a

little while had a price cut

about a month ago and that price cut was

for fifteen hundred dollars and if

i'm scrolling down a little bit notice

the pictures okay

uh this house needs some work all right

so this is

a thumbs up for me again not taking the

condition of the property into account

i really don't care about the condition

of the property because i'm never going

to put a dime of rehab money into this

if i were to sell this on the other end

which which is something that we'll talk

about

later on in this video i'm selling this

property

or renting this property as is it's

going to be the tenant

buyer's responsibility to go ahead and

bring this property

up to par that's typically how i usually

do

these types of deals so if the property

is in excellent shape

or it's in terrible shape it doesn't

matter as long as i can make a deal like

this

happen you can see the uh flooring needs

work

the house is dated you know just looking

through the pictures here

house is definitely out of date this

master bath

needs some work as well uh you can see

another bedroom

there's the garage the good thing

there's a two car garage

right there uh this kitchen is old

and outdated so this is something i'm

definitely

interested in looking into and that's

exactly what i plan on doing

so i'm interested in contacting these

owners the good thing about

zillow is you have access to the

property owner's information

just like you would on craigslist as

well so what i'm going to do is go ahead

and find the property owner's

information

once i find their information i'm going

to share with you the message

that i'm going to send to them in order

to get them to contact me back

so being that i have an interest in this

particular property

i'm gonna go ahead and contact the

seller direct

the beautiful thing about using zillow

and craigslist

and for sale by owner and sites like

that is you can contact the sellers

direct all right how do you do that so

in the side panel on the right hand side

of the page if you scroll all the way

down to the bottom

and you keep going you'll notice where

it says contact

agent chances are somewhere around this

vicinity you'll notice it says listing

provided by

owner okay and there's the owner's phone

number so i can

take this phone number and text the

property owner or i can simply click on

this button that says contact

agent and contact them there

i'm going to do both personally i want

the seller to see my text message

and i want them to see an email from me

as well so i'm just going to scroll up a

little bit

i'm gonna deselect this i want financing

information

tab i'm gonna type in my name here

i'm gonna type in my office phone number

and email address

and it says i'm interested in this

property in greensboro north carolina

i'm just going to paste

another two paragraphs there which will

allow the seller to see what my

intentions are

when i'm contacting them so let me just

share with you what that says

says i'm interested in your property in

greensboro north carolina

my wife and i are looking to purchase

another property in the area and wanted

to see if you may be interested

in taking payments on this property if i

paid

close to full price and then it says if

so

when can we speak now i'm i'm truly

interested in this property so i am

going to go ahead and click on contact

agent and hopefully i'll hear back from

them shortly

and as you can see this pop-up came up

so is this your first

time buying a home i'm going to click on

no they're basically looking for more

information so i'm just going to x out

of that

but i did contact the seller as you saw

and hopefully

i'll get a return call from the seller

so i can gather more information

from this seller as well let's go ahead

and x out of this box here

and then as you can see here's another

one i was interested in

let's take a look at this one as well so

we've been on zillow for

literally less than five minutes and we

found three

solid properties one of them didn't fit

the criteria

one did now let's see what this one is

looking like now this one is a pretty

clean property as well

not much to look at in terms of uh

pictures

let me just see what they're working

with here just looking

no they don't really have a lot of

pictures on this particular one

but it is a for sale by owner not a lot

of information on it

but what i'll do is i'll go ahead and

contact

this particular seller as well in fact

as i'm scrolling down here

there's an email address that i can use

to contact the

property owner says that they did some

work on the property

this is an out-of-state phone number

which tells me that this is probably

an absentee owned property it says that

this is the property owner's

phone number so again i'm going to go

ahead and

text this property owner and i'm also

going to click here

so i can get in contact with the

property owner as well

i'm going to type in my name

i'm going to type in my telephone number

the email address and you can see the

property address right there and it's

going to paste

that little paragraph and i'm going to

go ahead and click on contact

owner and there you have it the message

was sent

and hopefully we'll hear back from the

seller shortly so that's how you use

zillow.com in order to start finding

these deals

you can see it cost me absolutely

nothing but

about five minutes of my time if you do

a little bit of this every single day

there's no way that you're not going to

be able to make offers and create some

type of deals

using this particular site so as you can

see there's a lot of properties

available online you can do this right

from the comfort of your own home

right from your laptop to start finding

your first rental property

right now and you can also use sites

like craigslist for sale by owner

and other sites to do this as well in

fact an even easier way to get this done

is by using my investor deal pro

software what it does is it scrapes the

entire internet

craigslist and other sites to be able to

pull those leads into the software so

you never have to leave the software

you can contact these sellers in one

spot be sure to check that out

in the description box below now once

the seller contacts you

back step number two is to go ahead and

pre-screen the sellers

so how do you do that well an easy way

for you to pre-screen the sellers is to

use my property information sheet

that i'm going to link right up at the

top for you i created a video on this a

little while back

where i actually went through the entire

seller script

and i reviewed it and showed you exactly

what you needed to ask the sellers

in order to create any type of deal

whether it be a wholesale deal or

a creative deal just like the one we're

discussing in this video

but just to give you a general idea of

the type of questions that you need to

ask

in order to create a creative owner

finance

type of deal what you want to do is find

out two things

if there's a mortgage on a property and

also if the seller is willing to take

payment over time now another thing you

want to keep in mind is how you present

this

to the seller i wouldn't mention the

words owner financing

to the seller instead you can say take

payments

over time would you take payments over

time

i also wouldn't ask the seller if they

have an existing mortgage on a property

instead you can say are you currently

making payments

on the property so as you can see how

you word things

can either make or break the deal the

seller can easily throw up their

defenses if you ask them personal

questions like

is there a mortgage on a property or

would you consider doing owner

financing so instead of using key

phrases like that

use simplified phrases that will allow

the seller to feel comfortable

when they're talking to you again rather

than saying

will you take owner financing say will

you consider taking payments

over time and rather than saying is

there a mortgage on the property

simply ask are you currently making

payments on the property and that will

tell you

if they are making payments obviously

they have a mortgage

if they're not making payments then

guess what chances are

there isn't a mortgage on a property or

they're just backed up because they

simply stop making payments either way

you can create some type of deal out of

that situation so those are two key

things that you want to keep in mind

when it comes to screening the sellers

again be sure to check out my property

information sheet

and my seller script review video up at

the top now if you're enjoying this

video up to this point do me a favor be

sure to rock that like button below

and also share this video with all your

friends that might be interested in

purchasing their first

rental property but might be limited on

capital now let's go ahead into step

number three

all right so now that you have a

property for sale and you've also

pre-screened the seller

your next steps are to make an offer to

the seller

and get your agreement authorized now

when it comes to making your offer to

the seller what you're going to do is

use my creative

offer formula and i'm going to go ahead

and link a video up at the top that i've

put together

which shows you in full detail how that

creative offer formula

actually works now just to give you a

general idea of what the creative offer

formula is all about

it allows you to pay close to asking

price if not full asking price

to the seller it also discusses the

deposit amount

and the down payment amount that you're

going to provide to the seller

the monthly payments as well as the

amortization

to the seller now let's break this down

a little bit so when we're talking about

the actual

price to the seller let's just say a

seller is asking a hundred thousand

dollars

for a property and they want let's say

five thousand dollars

down what we're going to do is offer the

seller 100 000

and 5 000 down but we're going to ask

the seller

to delay the down payment until the

closing

occurs and remember that hundred dollars

that i told you about

earlier in this video what you're gonna

do is take that

100 and provide that as an earnest money

deposit

to the seller solidifying your agreement

between you

and the seller making your contract

valid

now just because you negotiated a

hundred dollars with the seller doesn't

mean you can't put down less

you could put down anywhere between one

dollar and 100

and still make a deal happen so if you

have

very little capital right now this is

the strategy that can work for you

no matter what your financial situation

is once you negotiate your price

as well as your earnest money deposit

and your down payment with the seller

what you're going to do is find out what

the rental comps are in

the area and in that video above i show

you exactly

how to do that and whatever the rental

comp's coming at you're going to slash

that in half

and offer that as a monthly payment to

the seller and as far as amortization is

concerned

you're never going to mention the word

amortization to the seller instead

you're going to use the word

payment so let me give you an example of

how this actually looks let's just say

that you have a property where the

seller is asking a hundred thousand

dollars

for the house you're gonna offer the

seller one hundred thousand dollars

and let's just say that they want five

thousand dollars down you're gonna offer

them

the five thousand dollars down but

you're gonna ask them to delay the down

payment

until the closing occurs and in exchange

for them delaying the down payment

you're going to give them a 100

earnest money deposit and again i'm

going to show you how to get that

earnest money deposit back

so you can be into this deal with no

money out of pocket even the down

payment is not going to come out of your

pocket

bear with me i'm going to explain it to

you in just a moment now in addition to

the price

and the earnest money deposit as well as

a down payment

that's a part of this deal what you're

going to do is offer the seller

half of whatever the rent two comps are

in the area so let's just say for this

particular

fictitious property that we're talking

about the rent

will come in at about a thousand dollars

per month

then what you're going to do is offer

the seller 500

a month and rather than mentioning the

word amortization

you're going to ask the seller if

they're willing to allow you to make 120

payments to them

and on 121st payment you'll pay the

property off

through what's called a balloon payment

or in other words a lump sum of money

to the seller up front and again that

money is not going to come out of your

pocket either

and i'm going to explain how in the next

step now when it comes to

the agreements that you're going to sign

with the seller

what you're going to do is sign what's

called a standard purchase and sell

agreement so any type of standard

purchase and sale agreement will do for

this type of deal

and in addition to that you're going to

sign a seller financing

addendum with the seller okay and these

two agreements will be put together

and combined as one agreement

and the cool thing about using a

standard purchase and sale agreement

is it usually will have a section in

there which will allow you to spell out

the terms

of your seller financing deal with the

seller

and if that doesn't cover it the seller

financing addendum

will cover it for you and i'll provide a

copy of these for you

in the description box below so be sure

to check that out now finally there's a

couple of things that i want you to keep

in mind

when it comes to getting your agreements

signed by the seller you never want to

use the words

sign or contract with a seller

okay those are red flag words if you use

the word

sign and contract the seller feels like

their back

is up against the wall so rather than

using the word sign

and contract use words like authorize

and agreement you see how that will

allow the seller to drop their guards

hey mr seller do you mind authorizing

this agreement

rather than hey mr seller can you sign

this contract so the words you use

and the way you talk to the seller is

really the key

to getting these types of deals done and

making the seller feel comfortable

while you're doing these types of deals

so again make your offer

get your agreement signed by the seller

make sure you talk to them in a way that

they're gonna feel comfortable

with the situation and then you can move

on to step number four

all right so step number four is to go

ahead and find your end

tenant buyer for the property now notice

i said tenant buyer

and the reason for that is because when

you're brand new what you're looking to

do is build

capital while creating passive income in

your real estate business

so by you finding a tenant buyer for the

property

what you're in essence doing is allowing

yourself to collect some money up front

collect some money every month and

collect some back end profits

and guess what the tenant will be the

one taking care of

your down payment the tenant will be the

one

taking care of your monthly payment and

the tenant will be the one

paying for the property on the back end

leaving you with a spread

on the property allowing you to make a

lot of money

on this type of property so how do you

go out and you

find these tenant buyers well it's

really easy

one strategy that we use in our business

is posting ads

on craigslist notice what this ad says

it says

quickly buy a house with no bank

involved

and very little down now you think

somebody's going to call on that type of

ad

absolutely quickly buy a house with no

banks involved

and very little down everybody's looking

to buy a house quickly what you're doing

is providing a solution for this type of

buyer

you're allowing them to purchase a

property without having to go to the

banks

and guess what if they don't have a lot

of money to put down

or they don't have the ability to pay

cash for a property

they can take a portion of the property

price

and put that amount down as well now one

thing i want to point out is notice i

said

very little down i never gave them an

actual amount

to put down the reason for that is

you're looking for the buyer

who has the ability to make the monthly

payments and put the most

down on the property so when a buyer

contacts you

and they say how much do you want down

your very next question is going to be

how much do you have to put down and

guess what the person with the most

money to put down

is going to be your buyer now generally

speaking you're looking for at least 10

down on this type of deal and that 10

will allow you to make

your down payment to the seller and in

addition to that

if your rental comps come in at let's

say a thousand dollars a month

you can actually increase the amount of

the monthly payment that

the buyer is going to have to make so

generally i like to increase that amount

by 10 or 20 percent and i'm selling the

property on at least with an option to

purchase

aka a rent to own now one thing that we

do

with these types of deals is we sell

these properties

as is so you never have to come out of

your pockets

for rehab capital either so keep that in

mind

now finally when it comes to the rent to

own exit strategy

typically what we'll do is we'll make

the buyer's terms

shorter than our terms what do i mean by

that

well if i have a 10-year payment plan

with the seller

i'm giving a buyer five years so

remember we talked about that 120

payments

and then having that balloon payment or

that lump sum payment

on 121st payment guess what that money

is never coming out of my pocket

because what i'm gonna do is go ahead

and offer the buyer

60 payments and then the buyer has to

pay me off on the 61st

payment making this a true no money down

deal

the buyer took care of my down payment

the buyer is paying off the house

and the buyer is going to pay off the

balloon payment allowing me

to make a huge profit on the back end as

well

so you've found the property you've

screened the seller you've made an offer

you found a tenant buyer

for the property finally you have to

close the deal

and the buyer is going to fund the

entire process

for you so in essence what you've done

is created a no money down deal

you've bought yourself a rental property

that will allow you to create

passive income for yourself every month

for

several years you made some money up

front you make some money

every month and you make some money on

the back end and like i said remember

that 100

earnest money deposit that you had to

put up in order to make all of this

happen

that money comes back to you once the

buyer

gives you the down payment on the

property so that's how you can go ahead

and buy your first rental property even

if you're broke

i've given you a five-step process in

order to make this happen

now it's up to you to get out there and

take action

in order to get the results that you

want that's the only way you're going to

go from where you are right now

to where you want to go in real estate

it's by taking massive action

in order to get results listen

go ahead and like this video subscribe

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if you want a lot more videos like this

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with everybody else who's not educating

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video be sure to leave a comment let me

know what you thought about this video

and i'm looking forward to seeing you

guys on the next one peace

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