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

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 to my channel if you're brand new if you want a lot more videos like this go ahead and check out my playlist on my channel and also click the notification bell so when videos just like this come out you'll be notified and you'll stay ahead of the game and won't be left behind with everybody else who's not educating themselves on this channel i hope you like this 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 [Music]

Channel: Jamel Gibbs

Views: 2,624,642

Keywords: how to buy your first rental property, how to buy your first rental property step by step, how to buy your first rental property with no money, how to buy your first rental property with no money down, how much money do you need to buy your first rental property, how to buy first rental property with no money, how to buy rental property with bad credit, how to buy rental property with little money, how to buy rental property with no money, real estate, real estate investing

Id: w_Nc1a6BSZo

Length: 30min 48sec (1848 seconds)

Published: Sun Jan 24 2021