Newbie on the move! I think???

Hi everyone! I've just started with DG, finished reading his book (for the 1st time, probably will read it about 6 more times!). I have started canvassing real estate agents & mortgage brokers, working on my buyers list, etc. but,,,, I've been eyeing investment properties in the area before even purchasing Dean's book and within the last week a gorgeous 3 unit / 2 car garage property came up for sale. The property has rental income of $2550./mo with "owner finanacing" available! The asking price is $245,000. Now I may be new at this, but this sounds like a no-brainer. I may be jumping the gun here, but how do I approach the owner and/or agent with a proposal to walk into this property with no money down on my part?

Now maybe a little background is needed. I've been unemployed since Dec. of last year and recently (in the last month) was diagnosed with congestive heart failure. Putting me out of the work force for at least a year, if not more. Right now I'm without unemployment because now I don't qualify and it may be anywhere from 6 weeks to 6 months to find out if I qualify for any state or local assistance. Which I don't want to be on! My goal is to purchase investment properties (multi-family units) with a positive cash flow to build up my monthly income. Now I know I'm skipping the part where I do some assignments just to get cash coming in, but I'm afraid by the time I get a few of those under my belt this opportunity will be gone. Any suggestions and/or direction on how to accomplish this? I can't afford DG's academy right now, so I am looking for a mentor if any are available?
Thanks in advance for any and all help!
God bless!

Newbie on the move! I think??? Posted 11/9 by rick2prosper

I posted my original question back on 11/9 and got no feedback at all. Am I doing something wrong? Did I place it in the wrong forum/group? I'm new to the DG website and trying to follow the rules for participating, but feel maybe I placed my question in the wrong place for answers. Assistance would be appreciated. Thanks in advance and good luck to all!


Newbie on the move

newage8767's picture


I too am new to the investment business and I wouldn't even attempt to advise you on how to approach this particular deal. However, have you taken the steps to put yourself in a position to make that first deal? In my opinion, it is not a wise idea to jump off the cliff before you are absolutely sure there is some kind of safety net. Have you lined up a real estate attorney to make sure your contracts are state legal or to cover you if something should go wacky? Have you selected an agent to work with you. Do you know which is the appropriate contracts you should use? Are you planning to purchase the property and hold it for rental income or are you planning to assign the contract?

There are a lot of things you need to consider and make decisions about what you want to do with the property. Even if it is owner financed, you will still have to be able to make the payments at least until there are renters in the property that can pay for your mortgage. I may be wrong, but from your post it does not seem as though you have a game plan for doing at deal on this property or any other at this point in time.

I know you are excited about getting a deal done, but do your homework first. There are a lot of investors out there that jumped in with no thought about the deal other than it was a deal too good to pass up and ended up in a jam. Again, do your homework first. There is a process to this investment business and that is what Dean was attempting to teach in his books and the folks in these forums are trying to help new investor learn. Take things one at a time and get all the steps accomplished first before you attempt that first deal. Don't worry, there will be other good deals that you will come across if you miss out on this one.

Hope I wasn't being too harsh, but I want you to be successful in your investment business and sometimes we have to remember to think before we leap. Put your ducks in a row first.

Hope I was helpful.


Yes I'm in the middle of doing my homework on this now. There are tenants (all 3 units)in place with long term agreements in place. I am collecting info from the agent such as, total rental income $2550., the specifics on what the owner requires for "owner financing" to occur, any mortgages existing on property, any espenses/utilities that need to be paid by the owner, etc.

She, the agent responded today the the owner is looking to finance with a "land installment" which gives me equitable title. (???) I looked in a couple of my RE books at home and could not find the term. I'm guessing it to be like a "land contract". He's asking for a minimum of 10% down, amortized over 30 years, with the mortgage to balloon in 3 - 5 years.
Now not all my home work is done but it's getting there.

Two obsticles I'm looking at right away are (1) I'm probably going to have to ask the agent for a copy of a "land installment" contract and have an attorney review it. (2) The 10% down I don't have. And putting it all together to make sure it has a positive cash flow.

So yes I am working it and not going into it blind, but I was looking how to approach the agent and/or owner working this as "no money down" rather than 10% or $24,500. Ideas???

Oh and thanks for the help, appreciate it! Keep me in line!



newage8767's picture


Have to gotten a RE Attorney yet? I beleive that is a very important step you should take right away. I gather you are referring to the seller's agent in your post. Personnaly, I would not rely on someone on the opposite side of the table to interpret the contract for me. A RE Attorney should be able to explain all that to you (i.e. land installment and equitable title). Be careful of those balloon payments. That's most of the reason the housing market is in the shape it is because folks couldn't come up with those balloon payments!

Are you doing any negotiating here? Sounds like you're just trying to meet the seller's numbers. Are you planning to hold the property or sell it? If you weren't planning to hold the property, but were going to assign it, you may be able to do an assignment deal if you had a buyer. If not you would have to purchase the property yourself and may need to get a hard money loan. Do you have the 10% down or is the 10% down the $24,500 amount you mentioned.

Like I said, I'm new to this, but if you don't have any funds and/or your credit isn't that great to allow you to qualify for a loan I don't see how you can meet the 10% down. So, I'm still asking what do you want to do with the property? Hold it for yourself for the rental income? From what I understand, to purchase and hold property you have got to actually purchase it yourself via your own cash or a loan. the only thing I can see is to purchase via assignment contract to an end buyer or bird-dog it. That's what I come up with from what I have learned so far. But, since I'm still learning just maybe there is some other way for you.

Good luck.

Hi Rick,

laurajohnson's picture

SOmetimes posts dissapear off the front page before we get to see them when there alot of other new posts.
As far as your prospective deal, newage made alot of good points.
Always do your due diligence in investigating values, rents, monthly costs - taxes, insurance, association dues if applicable. You dont mention if there is currently a renter in place - or if the owner is moving out and that is the rent you think you could get.
So I advise you to take your time, and run your numbers because they dont lie! When I first started I would stay up till 3 in morning trying to manipulate them because I wanted my first deal so badly - but in the end I had to make the choice to walk away from many of them. And we are so lucky to be armed with the information we have that keeps us smart investors!
So if you dont have a team in place - I suggest you start to feel out realtors. They can be a great asset in helping you run comps and know property values and rental income for your area.
So as posted above - its great to have the passion and drive - but take your time and learn before you leap! If this deal is gone you will have learned alot to prepare you to move quickly when the next one comes along.
I wish you all the best and hope that this helps you in some small way.


Thanks for the support. I'll keep you guys up to speed as to what happens. If anyone has any ideas on how to work around the $24,500 needed as down payment, I'm all ears!!!

Thanks again,

Hey Rick,

Daryl's picture

Newage and Laura are on point. Do your due diligence. Get your own attorney or agent to assist you. What are the rents in that area for a 3 unit with how many beds and baths? Seems like there is positive cash flow with $2550/monthly rental income and a $245K mortgage but make sure. Consider maintenance costs along with the costs Laura brings up. How much of that $2550 will got to the mortgage, to the seller, maintenance, and etc... Minus all that and you get your positive cash flow. Any positive cash flow is good, at least $100. Will you be doing most of the land lording and maintenance? An attorney or agent can help you out a lot with running the numbers and documents, if you find one friendly enough.

As for the down payment, an idea not sure if it can be done but ask the owner to roll the 10% on top of the mortgage. SO 245,000 + 24,500 = 269,500. It will get you out of the down payment but you will end up paying more. Hard money lenders or a conventional loan, credit cards, loan from a friend, a promissory note, and a partner provide funds you do all the work might help with the down payment. Just some ideas to get you going.

Good luck! You are motivated which is great. Do your homework like you said. Don't get yourself in a bind. I have no doubt that you can handle this. Like Laura says "know when to walk away". Keep us updated.

Down payment

Something else that could help out is if possible, lower your offer especially if it needs to be rehabbed or it needs cosmetics.

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