Want To Buy Real Estate But Short On Cash?

To quote from an old mentor of mine, Richard Reno, “Properties don’t have problems, people do.” This being the case, if you can solve a problem for someone, you can probably deal with them.As stated in the “Paper Chase” section, these initial strategies may be very basic to some of the readers, but not to others. I can assure they will be much more interesting as we progress. I personally learn best from examples of how something works. Therefore; I will use that method to illustrate ways to acquire real estate other than with cash down.

Finance One Property With Another

Situation: Jones wants to buy Smith’s house priced at $100,000 but has no cash except for closing. Jones also owns a free & clear lot which has a value of $15,000.

Possible Solutions

1. Jones gives Smith his lot as a down payment and Smith finances the balance.
2. Jones creates a note on his lot for $10,000 and gives the note to Smith as down payment.
3. Jones sells his lot discounted to $10,000 cash to a builder then uses cash as down payment on Smith’s house.
4. Jones creates a note on his lot for $12,000 then sells the note to a note buyer/investor, discounted to $10,000. Jones uses cash as down payment on Smith’s house.

Comment: This same formula can be used with personal property. For example: Jones may have a car, boat, airplane, etc. which he could give Smith as down payment or create a note on the personal property and use the note as down payment.