They seem to be never ending.

In fact, I think the modern main stream boom in the real estate information business has it’s genesis with the first no money down books written by Robert Allen back in the early 1980’s. You probably have a lot of the books and courses that I do on this stuff.

One thing that happens as you get into the details of the no money down system is that you realize you’ll need money for something.

Dang it. There’s that money thing again. It’s hard to escape in today’s real estate market, where cash is king.

No money down approaches work well in real estate markets where property values have equity. Where after-repair values exceed underlying mortgages by enough of a margin for a real estate investor to make a profit. The foreclosure boom of recent years has made many of the old approaches to real estate investment of little practical use.

The good news is, you can still do ‘no money down’ deals – at least none of your money down.

You see, there are essentially two different tracks you can take with real estate:

• Flip
• Hold

You can flip houses for quick profits (wholesaling, rehab & sell) or you can buy properties and hold for cash flow and appreciation.

In some instances, you may be able to get a property under contract and assign the contract to an end-buyer for a profit. Thus, you don’t need any money in the deal. But, God forbid the circumstance arises where you can’t find an end-buyer in enough time to close on the deal. Your deal (and profits) then go right down the toilet.

If you’re into buy and hold, financing is an integral part of the profit equation. And, if you want to buy and hold more than a few properties, mortgage financing is pretty much a game of Russian Roulette.

Most profitable real estate investment strategies will involve financing. Purchase financing, rehab financing, long term financing.

In other words, if you want to make money in real estate, cash is going to be involved.

Ready for the good news?

It does not have to be your cash. This is where private money comes into play. You can raise money from private individual investors for every single deal need you will ever have.

Unfortunately, far too few real estate investors go this route. They would rather jump through every conceivable hoop, ring of fire and pit of alligators trying to finagle a ‘cashless’ deal.

Are you in this camp?

Do you go through every gyration possible, pushing your brain through a spaghetti strainer – trying to piece deals together, where the problem could have been easily solved with cash.

It’s far easier (when you know how) to raise money from private investors and operate your business out of a position of power versus a position of permanent “hair on fire.”

If you only spent a little time on raising private money, and you went about it the right way, you’d tap into the vast wealth sitting and waiting for you.  Your business will be completely different.

Clinging to old approaches to investing or using techniques that look and sound really good but don’t work in the real world is an exercise in futility. Change and evolve with what the market does.

If the real estate market rebounds and home equity values come back up again, your private money raising will take on a compound effect. You’ll be hunting with an elephant gun instead of a .22.You’ll be fishing with a huge wide net instead of a bamboo pole with a piece of yarn and a hook.

The reincarnation of no money down is none of your money down.

Think about it.

It only seems like yesterday when Robert Allen was showing us all how to do “nothing down’ deals, assumable mortgages and the like. It wasn’t that long after that where we could do sandwich leases. subject-to deals and others using creative buying strategies. Where are the glory days of No Money Down?

The answer for buying single family house REO’s is: “Yes,” no money down is a non-starter for buying bank REO single family houses. Private money, either in the form of private mortgage loans or private equity investors becomes tremendously important here. You might still be able to get a decent deal if you try to purchase with a mortgage – perhaps on an estate sale or short sale – but the all cash REO buyer is going to get a far better deal 9.5 times out of 10.

Now…

For multi-family projects, the answer of whether no money down is dead or not is a bit trickier…

Technically, there are a lot of ways you can get into a multi-family deal with smaller amounts of upfront equity. HUD/FHA loans (221(d)(3), 221(d)(4), 223f, 207, etc.) LIHTC (Low Income Housing Tax Credits) state/community redevelopment incentives and others. Talk to a MAP lender and determine which FHA programs they can offer you for your multi-family project. There are some good ones out there now for as low as 15% down for acquisition financing. (This means on a $1,000,000 purchase, you have to drum up only $150k – better than having to come up with $400k or more with most other commercial loan programs right now…)

But, the thing is there is still that little nagging thing…you still need some equity.

Cash. Dough. Moolah.

On bigger multi-family projects, especially those where you’re getting FHA insured loans, you have up-front money to pay in 3rd party reports and legal fees, as well as additional diligence costs. Unless you own an engineering company, an appraisal company or a law firm, you’re going to need some up-front cash to even get to first base on this type of a deal. It’s nothing to worry about, though. You just need to arm yourself with a little bit of knowledge on how to pull in equity investors

Having private money in the form of equity capital is an absolute necessity with these type of apartment deals. A private mortgage loan will not help you here – it has to be equity capital and you have to have the deal structured the right way.

With commercial deals, such as strip malls, office buildings, mini-storage’s, industrial and mixed use buildings – having cold, hard cash is the only thing that’s going to get you to first base. Any commercial broker worth their morning coffee is not going to take you seriously unless you can show a strong ability to close the deal.

Tweak Your Thinking

The whole thing you should think about with ‘no money down’ real estate is not no money down, but rather: Who’s Money Down? Because if you’re a real estate investor and you bring a deal together and put the private investors in place, you may be able to get into deal with none of your own money  – and this is a key distinction. In today’s market, ‘No money down’ should be thought of as none of your own money down, and set up so that you are using other people’s money in the form of private money lock down huge cash flow deals.

So, as we go back over all three deal types that we’ve discussed in this post; single family houses, multi-family apartment deals and commercial properties, we can see that no money down at all isn’t really feasible in the current market,  none of your own personal money down is a easy to grasp as a reality. In fact, this is the most profitable mindset to have. Once you put some deals together with big time cash flow (and a market upswing in the future), you’ll have plenty of your own money to invest if you want.