OfflineOne of the most common questions I get from people who have started in the business of real estate with little to no money and possibly no credit is: How do I do a contract without earnest money or even how do I do an inspection without money.
A true question. If you had to pay earnest or even for an inspection than we could not consider the transaction a true no money down transaction. To add to this if you have no money how do you make contracts?
Here is what I would suggest.
Earnest Money
When dealing in earnest money one of the easiest ways that you do not need to pay for this is to add an addendum such as "Earnest money shall be paid within ___ days from acceptance", or "Earnest money shall be paid at closing."
In addition to this you could give a promissory note to the seller. The note would say something like this " I ___________ (buyer) promise to pay the seller of real estate located at ______________ $1,000 dollars towards earnest at closing."
Either way will work. Many Realtors do not like this way but it is a great way to buy yourself time allowing you to get your end buyer to pay the earnest instead of you.
Inspection
To get the cost of inspection held off for a period you can find inspectors that will allow you to pay them when you get paid.
The inspector would walk through the property; receive no payment until you get your assignment fee.
To make sure you fee does not shrink too much you could have the end buyer pay for the inspection in addition to your fee when they get the contract assigned to them.
Keep these ideas in mind and you could have a true, true no money at all transaction.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Thanks nstreet for the valuable info !! This is a part of my strategy as money right now is scarce ..
Good luck to everyone .
Randy
Thank you, Coach Nathan, for the tips/reminders. It's true. You can find just about anyone willing to wait to get paid if they know you are good for it. A dollar later is better than no dollar at all.
All of the people in this list are people that will do jobs for me and wait for their money. It's great.
appraiser
inspector
attorney
contractors (electricians, carpenters, plumbers, painters, etc.)
home-improvement store and/or lumberyard(in-house account or contractor's credit)
carpet cleaner
and of course RE agent, title company, and mortgage broker don't get paid til closing
This all comes with networking. Voila!
Rina
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That is valuable information. What I would like to know is if this works with the REOs too?
Great info!
I am assuming by the question, however, I am not fully sure, that you are wondering how the bank deals with paying earnest later using a promissory note.
If this is the question here is your answer:
Banks do not like to take notes for earnest. They are not out of the box thinkers. The person that sees your offers will look at it and realize that it does not fit in the guidelines from their manual and reject it.
Using addendums to your offers will work better.
Instead of a note ad "Earnest money shall be paid within 10 banking days from acceptance" or something similar. The 10 banking days will give you 14 total days to come up with the earnest money.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
I couldn't have come across a better post for today! I have a motel/restaurant that I can get a great deal on, but I don't have any earnest money. I have looked at all the forms on the website, but nothing quite fits what I need. It is being sold by the owner - as is, is what I am going to offer. It needs a lot of work, but I can get grant funding for that. I need to lock this property up in some kind of contract.
Any suggestions?
Thanks
Janet
Ps A few stats. I am offering 550,000 last appraised at 850,000; but it has 35 rooms and living quarters, plus restaurant and pole building.
"Investing in you - Improving our community"
Any suggestions?
Thanks
Janet
Ps A few stats. I am offering 550,000 last appraised at 850,000; but it has 35 rooms and living quarters, plus restaurant and pole building.
The suggestions will be based upon the income. An income property with a lot of rooms that makes no money or is negative cash flow is not a good investment.
I am not saying that this is your situation but I do suggest getting two years profit and loss statements and two years rent rolls.
Because the property is being sold FSBO you can consider a note very easily. I would suggest making an offer with your state specific real estate purchase contract. Most states have an adaptation from the residential contract to a commercial contract. I would suggest looking for this.
Also, make sure you give yourself plenty of time to do due diligence. Common for commercial real estate is a 60 - 120 day due diligence period.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125