Lance Edwards, President, First Cornerstone Group, LLC.
BY LANCE EDWARDS— If you are involved with doing multifamily property deals, you need to be doing “nothing down” deals. If you can buy multifamily properties for no cash, then you can continue to buy more properties. If you buy them right with a cash flow and the properties pay for themselves, then you can keep pursuing more deals. There is a formula for putting together “nothing down deals”.
You have choices in doing multifamily deals. You can do wholesale apartment deals, or you can hold apartment deals for wealth or you can even do both. These are “no cash” techniques and you are the person holding the “power”. As the person controlling the deal, you hold the “keys to the kingdom” because money is the part that’s easy to find.
How do you own apartments without using your own cash? It comes down to raising private money. Raising private money does not have to cost you money. As a general rule, raising private money should not cost you money. Raising private money is not about spending money, it is about creating a deal that gives you a pretty good return on your investment.
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You can raise private money as a lender on your property, as an equity property or as a combination of the two. There are four elements to raising private money. These four elements are predisposed, control, no risk or low risk and high return.
Finding someone who is predisposed to investing cash in real estate is the first element to raising private money. You need to find people who are already investing in real estate because they already know the benefits of real estate and do not need to be sold on the idea. They just need to be sold on your project.
The second element to raising private money is allowing your investor to have control over his money. The first thing you need to be concerned with is the preservation of capital. An investor will make sure that he will not lose his money. The investor wants to be assured of that before he is going to be interested in return on investment.
Making a deal either no risk or low risk is the third element of raising private money. No risk would be to have a lien on a property and making it secure. The investor wants to know that if you mess things up, they can get control back. These are things that an investor thinks about before they release their money.
The fourth and final element to raising private money is high return. An investor will want to know how much return he will get for the investment. This will vary with individuals and the risk of the project.
Putting together “nothing down deals” is not something that is unrealistic. It is completely practical and enables you to keep doing multifamily deals without having everything tied up into one deal. Put the four part formula to work for you and start raising private money for your “nothing down deal” today.
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