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Mastering No Money Down Property Deals · The Property Unleashed Podcast

• 0:00
  Speaker 1: How to do no money down property deals.
• 0:02
  Speaker 1: Hello, my name is Mark Fitzgerald.
• 0:15
  Speaker 1: It's great to have you joining us here today.
• 0:17
  Speaker 1: So you'll have heard the expression in a lot of cases no money down.
• 0:21
  Speaker 1: How can I do no money down deals?
• 0:23
  Speaker 1: Well, at the end of the day, I'm not a massive fan of the term no money down, because I always believe that there are some form of finance or money that has to be laid down when doing property deals.
• 0:35
  Speaker 1: It's a bit of a buzzword thing, but it doesn't necessarily have to be your money.
• 0:41
  Speaker 1: So when you say no money down, you can borrow money.
• 0:44
  Speaker 1: You can do all sorts of different tactics to do property deals, and I'm going to share with you some of those right here.
• 0:51
  Speaker 1: Right now.
• 0:52
  Speaker 1: When it comes to doing no money down, it can be done, and there's a lot of people out there doing these things very, very successfully.
• 1:01
  Speaker 1: So what is one of the best ways to acquire a property no money down?
• 1:06
  Speaker 1: Well, you've guessed it, the first one would be purchase lease options.
• 1:11
  Speaker 1: Purchase options Call them what you will, but they are fundamentally an amazing way to do a deal on a property and not have to find big deposits.
• 1:22
  Speaker 1: So what is a purchase lease option.
• 1:24
  Speaker 1: Well, a purchase lease option is where you find a vendor or a landlord or a homeowner who wants to sell their property but normally doesn't need the money right now.
• 1:34
  Speaker 1: They're quite happy for you to lease the property from them, maybe pay them a guaranteed rent each month and buy the property off them for a set price, which could be the price it's on for now in a few years time.
• 1:47
  Speaker 1: Now why would they want to do this?
• 1:49
  Speaker 1: Well, sometimes people inherit properties that they don't want to hassle, or they just don't know what to do with these properties.
• 1:56
  Speaker 1: Sometimes people are having problems with the property, or it's become or the property's gone into disrepair and they cannot afford to do the property up.
• 2:04
  Speaker 1: They then they can't afford to rent the property out and it's just costing them a lot of money, so they look to sell these properties.
• 2:10
  Speaker 1: Now, sometimes these stick on the market and the one thing I will say is you're looking for motivated sellers when it comes to purchase lease option, and there will be more people that are not motivated out there than are motivated.
• 2:23
  Speaker 1: So we need to be mindful of the fact that it's a numbers game when looking for these deals.
• 2:29
  Speaker 1: If somebody says to me my strategy is purchase lease options, and that's all I'm focused on then they are going to miss so many great opportunities and deals out there, and that's the wrong way to look at it.
• 2:40
  Speaker 1: You want to look at a purchase lease option as a tool in your toolkit, in your mind, that you can get out there and you can do good property deals and you can see whether that tool fits in with the seller of the property.
• 2:53
  Speaker 1: If they need the money now.
• 2:54
  Speaker 1: Now maybe they don't need all of the money now.
• 2:56
  Speaker 1: Maybe they need 10,000 pounds to go on a nice holiday or pay for some wedding or something, or 20,000 pounds, and maybe you can give them that chunk of change.
• 3:04
  Speaker 1: But the property itself is worth a lot more.
• 3:07
  Speaker 1: So there's all different ways you can do it, but fundamentally you do have to give over some money, so you have to give it a minimum of a pound.
• 3:16
  Speaker 1: Okay, a minimum of a pound.
• 3:17
  Speaker 1: Now, again, for no money doesn't have to be your pound.
• 3:20
  Speaker 1: You can go to a friend Let me quit, let me quit.
• 3:23
  Speaker 1: You could do it like that so you could say it's no money down.
• 3:26
  Speaker 1: It doesn't necessarily have to be your money, but again, it's a very good way to get into property to start burning up a portfolio, but to get out there and help people as well.
• 3:34
  Speaker 1: So, fundamentally, you're locking a price the purchase price of a purchase lease option, and that can be you know, three, four, five, six, seven.
• 3:43
  Speaker 1: I won't go over that if I were you.
• 3:45
  Speaker 1: But seven years in the future you've locked that price in.
• 3:49
  Speaker 1: Secondly, it's an option, so you have the option, not the obligation, to buy the property.
• 3:53
  Speaker 1: At the end you want to make sure that you make any option assignable.
• 3:57
  Speaker 1: And listen, if you're not 100% sure about how to do purchase lease options, then do find out more, because they are very, very powerful.
• 4:04
  Speaker 1: But you can also make huge mistakes if you do not know what you're doing.
• 4:08
  Speaker 1: But you want to make the option assignable, so not necessarily you that buys the property.
• 4:15
  Speaker 1: So maybe in a couple of years time you're full intention of buying the property, but something's happening and you cannot do it.
• 4:20
  Speaker 1: You do not want to lose the deal.
• 4:21
  Speaker 1: You want to maybe make it assignable and then, if you make it assignable, you can find an investor or somebody else to buy that property on your behalf, or they could buy it for you and you still look after it for them.
• 4:31
  Speaker 1: So make sure that you've got an option and it's assignable.
• 4:34
  Speaker 1: And, of course, then it's the lease.
• 4:36
  Speaker 1: A lease in is a monthly fee that you decide with the landlord or the homeowner to say what covers your mortgage and how can we do this.
• 4:45
  Speaker 1: Now, when you're talking about mortgages, the property is unencumbered.
• 4:49
  Speaker 1: I doesn't have a mortgage, happy days.
• 4:51
  Speaker 1: If it does have a mortgage, you would want to know how long is left on that mortgage.
• 4:55
  Speaker 1: Okay, because you don't really want people remortgaging their properties.
• 4:59
  Speaker 1: They'll be less inclined to want to remortgage your property if they're doing a lease option on it.
• 5:05
  Speaker 1: And, of course, if it is somebody's home residence, you need to check the mortgage terms to make sure that whatever you want to do with it is actually allowed on their mortgage terms.
• 5:15
  Speaker 1: If it's on a residential mortgage rather than a buy to let mortgage, then you may struggle to let it out.
• 5:22
  Speaker 1: You may be breaching mortgage terms.
• 5:23
  Speaker 1: So there's a lot that can go wrong and we're not going into that here, but it's a great strategy for a no money down deal.
• 5:30
  Speaker 1: Okay.
• 5:31
  Speaker 1: Also, let's move on to the next one.
• 5:33
  Speaker 1: Now we could look at vendor finance.
• 5:36
  Speaker 1: Vendor finance is brilliant stuff.
• 5:38
  Speaker 1: It's really where the seller acts as a bank and you make payments to the seller instead of a traditional mortgage lender.
• 5:46
  Speaker 1: These deals often require a very, very good relationship between you and the seller.
• 5:53
  Speaker 1: But if you can build up that rapport, if you can build up that no-liking trust, this can be very, very beneficial for all parties.
• 6:01
  Speaker 1: Again, you need it to be either unencumbered no mortgage on the property or you need it to have a decent length of mortgage terms on there to make it worthwhile.
• 6:11
  Speaker 1: You also want to be using, as with purchase lease options, solicitors to draw up contracts.
• 6:17
  Speaker 1: You want to have a heads of terms drawn up.
• 6:20
  Speaker 1: You want to know what you're doing, what your end game is.
• 6:23
  Speaker 1: But again, if a seller doesn't need the money now maybe they've got a chunk of money coming out of that deal then you can potentially give them what they will get with their money put into the bank, maybe a bit more to keep them sweet, and of course you can then babysit the property, or you could buy the property off of them and with the chunk of change that they get, they could loan that back to you and you can do vendor finance that way as well.
• 6:53
  Speaker 1: Of course, you can also use them as a joint venture partner as well.
• 6:57
  Speaker 1: But again, it's all about relationships.
• 6:59
  Speaker 1: It's all about building up the no-liking trust.
• 7:02
  Speaker 1: And that leads us on to the next one, which is JV partnerships joint venture partnerships.
• 7:06
  Speaker 1: Listen, if you don't have any money but you have the time and the skills to be able to do successful property deals, then you can partner up with people who have the money but don't have the skills and don't have the time.
• 7:19
  Speaker 1: The key here, realistically, is to be able to bring value to the table, is to be able to do the deals on their behalf.
• 7:25
  Speaker 1: Now, a lot of people want to jump into joint venture partnerships from the word go.
• 7:30
  Speaker 1: It's just an easy option.
• 7:32
  Speaker 1: They'll meet somebody at a networking event or a training event or anything like that and then they'll say well, I'll tell you what.
• 7:38
  Speaker 1: Let's do a JV, let's do a joint venture together.
• 7:41
  Speaker 1: Listen, be very, very careful Again.
• 7:43
  Speaker 1: With a joint venture, you need to build up a no-liking trust.
• 7:45
  Speaker 1: You need to get to know people.
• 7:47
  Speaker 1: Okay, don't just jump into any sort of deals like this that you do not know the person, that you haven't built up any trust, any no-liking trust, and you haven't built up that relationship, because you'll end up getting yourself into a very, very sticky position in a lot of cases.
• 8:02
  Speaker 1: So you do need to know the person that you're doing this with.
• 8:05
  Speaker 1: If it's a family member or a close member of the family that you've known for years, that's a great starting point.
• 8:10
  Speaker 1: Why?
• 8:10
  Speaker 1: Because you've already known them.
• 8:12
  Speaker 1: You know what they're all about.
• 8:13
  Speaker 1: So it's really just getting down to that.
• 8:15
  Speaker 1: But make sure you've got the relevant contracts, make sure you've got a good heads of terms between you and you've both got an end in mind, the end game.
• 8:22
  Speaker 1: What are we doing with the property at the end?
• 8:24
  Speaker 1: What are we doing with the money at the end?
• 8:25
  Speaker 1: What are we doing with whatever you've decided to joint venture on?
• 8:29
  Speaker 1: Okay.
• 8:30
  Speaker 1: But again, when you're using somebody else's money, you need to know what you're doing, okay.
• 8:36
  Speaker 1: So make sure that you are savvy enough to be in communities, like-minded people, communities that you know what you're doing.
• 8:44
  Speaker 1: You've got the relevant education and relevant training to be able to help and support whoever it is that you're working with Okay.
• 8:51
  Speaker 1: The fourth one is you can do rent-to-rent deals.
• 8:54
  Speaker 1: Now, you don't get capital growth with rent-to-rent because you never actually own the property unless you turn a rent-to-rent into a purchase lease option.
• 9:02
  Speaker 1: So what is rent-to-rent if you don't already know Well, rent-to-rent is where, fundamentally, you become a property management agent and you take on the landlord's property as if it's your own, taken on the utilities, the maintenance costs and everything.
• 9:15
  Speaker 1: But you don't have to find big deposits, so it's no money down.
• 9:20
  Speaker 1: You could fundamentally do a rent-to-rent deal and it not cost you a bean.
• 9:24
  Speaker 1: This, realistically for me, is the no money down.
• 9:28
  Speaker 1: Now, most rent-to-rents you have to put a bit of money into the property, maybe a bit of dressing, a bit of painting, anything like that.
• 9:35
  Speaker 1: But you can do a rent-to-rent deal.
• 9:38
  Speaker 1: I've helped people and I've done rent-to-rent deals myself where we haven't actually had to spend any money whatsoever.
• 9:43
  Speaker 1: So no money down, happy days, but we don't own the property.
• 9:47
  Speaker 1: So it's not like you're requiring a property no money down.
• 9:51
  Speaker 1: Maybe in the future you are.
• 9:53
  Speaker 1: And I always say to my landlords as well if you're ever interested in selling the property, please let me know, because I may be very, very keen to buy off you either now or in the future.
• 10:03
  Speaker 1: So rent-to-rent is a great one.
• 10:05
  Speaker 1: And of course, rent-to-rent works best with the HMO strategy Houses of Multiple Occupation, where you let the property out room by room on individual ASTs, as it is at the moment, or if it's a smaller property, you can do short-term rentals, service accommodation, airbnb, bookingcom, those sort of things as well, and all they do is they give you more cash flow in the properties, which means then that you can give a good rent to the landlord each month, you can cover the cost of the utilities and anything else that you've got there and, of course, you make your margin by being able to let the properties out for more money.
• 10:45
  Speaker 1: It's a great strategy to use when done correctly.
• 10:48
  Speaker 1: So, again, make sure you know what it is that you need to be doing.
• 10:52
  Speaker 1: Make sure that you're surrounded by people that can help you and support you, so that you don't go wrong and you can get stuck in.
• 10:58
  Speaker 1: And there are landlords and there are investors and all sorts of people out there at the moment that need our help okay, that need our support and need our help.
• 11:09
  Speaker 1: So another way that you can do property deals is basically, you know you can use investors so we've talked about joint venture partnerships but you can just use investors.
• 11:18
  Speaker 1: So somebody lends you 50K, 100k of money for basically a return on their money.
• 11:25
  Speaker 1: So you could say I'll give you a 5% return annually on 100 grand or whatever it is that they decided to loan you.
• 11:33
  Speaker 1: Equally to that, you could give them a monthly return on it.
• 11:38
  Speaker 1: You can.
• 11:39
  Speaker 1: You can structure that in all different ways.
• 11:41
  Speaker 1: You can look at doing crowdfunding yourself as well, which is where you get a pot of investors all to pull the money into the pot and then you do it through a company and basically you can give that company either first charge or that company owns the properties and they've all got percentage share in there.
• 11:57
  Speaker 1: That's if you have a lot of investors, that can get complicated.
• 12:00
  Speaker 1: So, again, make sure that you know what you're doing there.
• 12:03
  Speaker 1: But it is another way of being able to use other people's resources and money, given them what they want, so you get what you want.
• 12:11
  Speaker 1: There are, of course, companies out there that do crowdfunding as well, so you can check those out and SAS pensions as well.
• 12:19
  Speaker 1: So some people will have SAS pensions, which is a great thing that you can use.
• 12:26
  Speaker 1: If you've got a private limited company and you've got pensions from different businesses or potential different people that you've worked for, you can use those pensions, put them into a pot together, put them into a SAS pension.
• 12:38
  Speaker 1: That doesn't mean that you can start going out there spending the money.
• 12:41
  Speaker 1: But what that does mean is you can start loaning the money to your business, your property business, and to property deals.
• 12:49
  Speaker 1: Now, those property deals do have to be commercial property.
• 12:52
  Speaker 1: When I say commercial, that's a bit like your shops, offices, pubs.
• 12:57
  Speaker 1: They're all sort of commercial properties.
• 12:59
  Speaker 1: They're not your residential houses, flats and things like that.
• 13:02
  Speaker 1: So you have to be doing deals on commercial properties.
• 13:06
  Speaker 1: You have to also be able to show how you can pay this money back and you cannot do the full amount.
• 13:13
  Speaker 1: You can probably lend about half of your SAS pension to 25% of it, depending on the deals, the criterias, and again, there's a lot of red tape to go through on that.
• 13:23
  Speaker 1: But SAS pensions are brilliant.
• 13:26
  Speaker 1: There's more and more landlords that have SAS pension meetings as well as network and events where they're looking at seeing where they can put their SAS pension.
• 13:33
  Speaker 1: And the great thing about a SAS pension is you've got more control over it yourself.
• 13:37
  Speaker 1: So if you have your own limited company and you've got some pensions sat around, they're probably worth more than 75,000 pounds.
• 13:43
  Speaker 1: It's really worth looking at doing that Because, a you can lend your SAS pension to other people and, b you can lend it to your own business as well.
• 13:52
  Speaker 1: So you've got full control to help you build your own property portfolio.
• 13:56
  Speaker 1: I could keep going here, because there's people who've got massive amounts of equity in their property that you can help them maybe release the equity and use that for further investing.
• 14:06
  Speaker 1: The list goes on, and what I'm trying to say to you is, if you're enjoying this is, make sure you get educated in all of the different things that I've spoken to.
• 14:14
  Speaker 1: You don't have to know everything at first, but you need to surround yourself with like-minded people that do, so.
• 14:19
  Speaker 1: Make sure you're going out there in your network, supercharge your property investing.
• 14:25
  Speaker 1: So I hope you've enjoyed this.
• 14:26
  Speaker 1: If you have, then please feel free to like it to share, to leave us a review, leave a comment below.
• 14:32
  Speaker 1: Let us know if there's anything else that you'd like us specifically to talk about, maybe something that I've touched on here today that you'd like me to dig deeper into, and we are more than happy to help and support you, and I look forward to you joining me in the next episode.
• 14:45
  Speaker 1: You take care and bye for now.