You're listening to the Master Passive Income Podcast Network.

Welcome to the Master Passive Income Show.

My name is Dustin Heiner, and I'm here to help you get financial independence, create generational wealth so you can afford anything you want in life by investing in real estate.

And in today's show, we're going to be talking about everybody's favorite topic.

In fact, the number one topic that's always listened to, downloaded, or found on my channel is it's about financing your real estate.

Cause not a lot of us have money.

We weren't born with lots of money.

But even if you haven't and you don't have any money, I'm going to.

Share with you how you can invest.

In real estate and use other people's money and successfully get funding for your real estate investing.

All right, let's start the show.

Welcome to the Master Passive Income Podcast where we talk about investing in real estate with a special focus on making enough money to so you can quit your job and live the dream life.

And now, here is your host, Dustin Heiner.

What's up?

What's up?

Super blessed as always to have you here with me on the show.

Now, recently a Realtor reached out to me and says, hey, Dustin, we have this deal that I'm trying to help another Realtor sell, and it's an apartment complex in Chattanooga.

So this Realtor knows that I invest in Chattanooga.

We met at a local real estate investor meetup.

You guys know that I've always suggested, if you've listened to my show very often, I suggest getting out, meeting people.

That's why I have my conference, the Real Estate Wealth Builders Conference, which is now Income Building Live.

The names is just changed, but it's basically the same thing where we're trying to help you to build income in all of your investing.

Now, with building income, we had the idea of, well, we have to have a mortgage, we have to have financing, we have to use money to buy real estate.

And that's what this episode's all about, is getting financing.

And so this Realtor sent me the deal.

It's in Chattanooga, Tennessee.

I want to say it's about 150 units, and the seller wants $105,000 per unit.

Now, quick background.

In March, I just bought, with my three other partners, general partners, we raised $10 million, bought this apartment complex, super terrific apartment complex, 325 units, and we bought it for almost just a little over $60,000 a unit.

Now we got a really, really good deal because the seller was distressed Meaning they needed to sell it.

Well, we bought it for almost half of the market value we know right now, though.

And I also know, obviously, because I just bought this property, the market value for most apartment complexes certain years and all that sort of stuff kind of goes into it.

But this apartment complex that the seller is reaching out to me wants $105,000.

I know the max we could probably sell it for right away is $105,000 to $110,000.

So I'm paying almost market value, which I never do.

We're investors.

We don't want to pay market value because when you pay market value, then your mortgage is higher.

We want to capture that equity.

And in thinking about financing your deals, you can get back better cash flow when you bring the value down or the cost of that property down.

So because I knew that the actual market value is right around the same price that they're selling it for, I know I'm not actually acquiring any equity when I buy the property, which means buy it for less than it's worth, and my mortgage is going to be higher.

So those two main things going to me passing on this deal.

Now, here's another quick thing that I'm telling you right now.

So Charles Seaman, who's our multifamily coach, he has the multi or MPI multifamily podcast.

Definitely check out his podcast.

We coach multifamily as well.

If you have five units and above, he's done at least a dozen deals of hundreds and hundreds of units each deal.

So he's a fantastic coach as well, as does such a great job.

I run all my deals through him.

And so he's amazing when it comes to multifamily.

And I was talking to him and I want to share you a little bit about what he said to me about what's going on in the market right now.

So this is something he sent out to, to.

To me.

But he says he just spoke with a guy who's 40 years investing in real estate and private equity experience to get his feedback.

He wanted to know what he's thinking about the market and the economy.

He said that this right now, this market right now is much worse than 1990 and 2008 for commercial real estate.

And it has been challenging this time because lenders have been reluctant to make deals.

He said that they are more willing to write off bad debt back in 2008, but that's not the same now.

Now he said that.

And remember, this is an investor has been investing for 40 years and when you have a bigger perspective that you have much more or more market cycles going up and down, seeing and investing through market cycles.

Because I invested started investing back in 2006 and so I saw the market cycle.

Most of the or these people like you see on Instagram and TikTok, they started investing in 2021 and they're saying oh, I'm so good at this investing.

Well, they've only been investing in an up market.

We'll see who is actually investing well after the next correction, if not crash in the market.

You see prices are so high, it has to come back down eventually.

Will or have some sort of correction.

Now this investor who's been around for 40 years, I've only been doing it for 20 years.

He's been doing it for 40 years, seeing so many market cycles that he's now saying he thinks it's worse than 2008, which was really, really bad.

He said now with his insights, the only caveat is if Trump puts in a new Fed chair next year and then he that new chair cuts interest rates.

But how that affects the market factors, economic factors could be a big question mark and not really know for certain.

But if everything stays the same, he believes that lenders are gonna continue to be reluctant to make deals this time because of how much less properties are worth.

And he says this is the investor.

He says they're afraid that it would really shock the market that he mentioned that 40% of the existing multifamily debt is in trouble.

Get that 40% of the current multifamily real estate investors, all those big name people are saying, hey, I have thousands of units and I have all this money out there and millions and millions of dol.

Well, you know, I've stayed away because I saw the problem and I've only been jumping back in the last two years.

Now we have 750 apartment units in the commercial real estate investing because we saw amazing deals, amazing deals, great cash flow because the distress is coming up and the commercial market, he says 40% of the existing debt is actually in trouble.

He also mentioned the 1990 crash resulted in six years of, of cap rate expansion.

And if there was a crash like 1990, we're gonna have a crash, but then we're gonna make so much more money.

And this reversal from the correction to the crash and then also coming back up, well, we're gonna make so much more money.

So what I'm seeing is if you're a strong real estate investor, if you know how to invest, if you've been investing before.

We're gonna see a huge wave of amazing deals coming away.

Sadly, people are going to get hurt.

People that didn't know how to invest in real estate.

And this goes for single family homes as well.

There are so many Airbnb owners, in fact, there's like 70,000 Airbnb short term properties in Arizona alone that they're sitting on the market because fewer and fewer people are traveling and there's such a huge inventory.

So the reason why I'm telling all this is also the reason why I have this episode today is because we have a huge opportunity coming very, very fast for us real estate investors.

I'll be completely honest.

I have so much access to capital, and those are key words you need to know.

Access to capital.

I have so much money that I can use.

Doesn't have to be my money, could be other people's money, which it is, plus my own money to buy more real estate, because I have that access to capital.

And, and having access to capital doesn't.

Have to be your own money, like I said.

And that's why we have this episode talking about all the financing ways and how to get funding for your real estate.

Because if you're not currently investing, you need to start investing right now.

Because it's like surfing.

If you are trying to catch a wave when you're surfing and the wave's coming and you sit there and wait, wait, wait.

Then as soon as the wave hits you, you're like, oh, realize, oh my goodness, the waves here, you start paddling then.

Well, you don't have any momentum.

You're going to wave is going to miss you or you're going to miss the wave.

But what you do is you coming, you start paddling now, you start paddling now before it gets you.

So you have momentum to carry you into that wave and then you're riding that entire wave into the rest of the shore.

Same thing with real estate investing.

If you're not investing right now, it's going to be very hard to get into the game.

If you're not investing right now, if you don't know how to invest, you might be thinking, man, I don't even know how to invest.

And once the crash comes, then I'm going to learn.

Well, you got learning to do and then you got to start investing.

You're going to miss the the ball, you're gonna miss the game.

And so what I want you to do is by learning how to get funding and get financing for your real estate, then start implementing it and if you need more help, like my podcast, get it for free, download everything, listen to it.

Free.

So much information to get you investing without costing any money.

But if you want a little more help, if you need me to coach you along the way, I've got four other amazing real estate investing coaches that were students of mine that are now coaching because they love helping people as well.

And if you're curious about the coaching that we do here at Master Passive Income, I'm going to connect you with one of my students, one of my students who said, hey Dustin, I just want to help if some, if there's somebody that is looking to invest but they want to talk to another student about how terrific it was as a Master Passive Income students to be able to invest, I'll be free, like have them talk to me.

So we created a link.

This is the first time giving out on the podcast, but here's a link for you.

If and the link will be in Description Go to masterpassiveincome.com bookacall all one word bookacall masterpassiveincome.com bookACall and you'll get on his calendar where he's literally gonna walk you through, this is what happens, this is what you're gonna get.

This is what I did.

And he's a fantastic investor.

He's even come to Rubecon and helped Rubecon because he sees how valuable it is just to help other people.

And when you talk to him, he's going to encourage you that you need to invest in real estate to change your life, which has changed all of our lives now, thousands of students later.

But I want you also to be so comfortable with investing that when this wave comes of amazingness in real estate investing, you have the financing, you have the education, you have the people around you, other friends and other investors working with you and helping you.

That's what I have and that's what I want for you.

And with that I also, and I want to pause for just a quick second and say thank you so much for listening to the show.

If you've gotten anything out of the show, I would appreciate it if you went to anywhere that you listen to say Apple or Spotify or wherever and leave a five star review.

Honestly, I really appreciate you leaving an honest review.

I just love giving all this information out and I want to see you succeed.

Also.

Send this to one person, just tell one person and say, hey, Dustin wants to help a million people to invest in real estate.

You need to listen to this because it's going to change your life.

Lastly, get my real estate investment course completely for free.

Text the word rental R E N T A L rental to 33777 rental to 33777.

I'll literally give you my course showing you everything in the business so that you can become financially independent.

So if you're like me, funding your properties, funding your business to buy more properties is hard to do.

It's hard to come up with the creative ways to buy properties.

You know, it's also hard sometimes to get mortgages because they look at your debt to income ratio.

They look at how much money you have that is coming in versus how much you have that is going out.

You know, debt to income.

But having the ability to finance your properties is absolutely amazing.

Now what I want to do is I want to look at a few key ones that I've used in the past, but also give you other ones that people kind of overlook and they think maybe I shouldn't use this because it might be risky.

Well, I'm going to tell you how I've used it in the past and how I've grown my business with funding.

So there are many different ways.

And so today, let's look at a few of them.

Now.

I've bought many properties.

I've bought some with seller financing.

I bought some with all cash.

I bought some with a conventional mortgage, refinance money, pull out of properties and bought more properties.

I've used hard money, used, you know, family members.

I've used all the different types of ways to actually buy properties.

Now here's another one.

I actually used credit cards.

I used a credit card to actually buy two properties.

I'll tell you that.

So I'll get into that in a little bit.

But I've found that as a business owner, as an entrepreneur, I need to be creative.

I need to make sure that I can solve problems that come up like finding money to be able to buy a property.

You know, if I'm as I'm looking up many, many different types of deals and different ways that I can grow my business.

Sometimes I get deals that I can't buy or I can't afford, you know, with a new mortgage or if I don't have cash or however it might be, I need to find out creative ways to buy a property.

And other ones would be like even seller financing, talking to the seller and saying, hey, I can't buy the property.

Or really say, you can't, but say, I would love to buy the property with your Seller financing, where I will pay you.

You're basically the bank.

You'll have no headaches, but I'll take care of the property as well as pay you.

Just like you or the bank.

You're going to be monthly making money every single month.

And I will pay it off in, you know, 10, 20, 30 years or whatever it might be.

So I'm jumping ahead of myself.

So let's jump into a couple of my favorite ones.

So if you have the ability to.

Let's jump in.

The first one.

First one would be all cash.

Now, I know everybody's saying, oh, man, yeah, if I had cash, I'd buy, you know, I'd buy everything if I could.

But not all of us have cash.

Well, I'm here to say that you don't need a ton of cash in order to buy a rental property.

If you have cash, let's say you're working a normal job where you're saving hopefully $100 a month.

I encourage you.

Some people might say, well, I can't save $100 a month.

Well, I'm going to say, cut out some things so that you can start some saving $100 a month so that you can start putting your money away so that you can invest.

Because if you're not saving money to invest, I'm going to say it's going to make it harder and harder for you to buy properties.

And it's not.

It's not impossible.

You can absolutely buy properties with low and no money down.

But it's just so much easier, I tell you, it's so much easier when you have cash.

And so some people might think, well, I can't buy a house for $120,000.

I don't have that in cash.

Well, could you save up maybe $15,000?

Yeah, you probably could.

I know my wife and I, we first got married, you know, really, really poor.

Didn't have much money, but she got some.

Some money.

When we got married, she also got some inheritance.

And we had $17,000 to her name.

And we thought, well, I thought I said, babe, I really want to start investing in rental properties.

I see the future of us owning many rental properties and me not having to work a job, you being able to stay home and homeschool the kids like you want to and things like that.

And so that we can free up our time and free up basically control over our lives.

So we control our lives.

And so I took that $17,000 and put that down on one property, that one property started bringing in $525 a month.

And if you do the math, after about three, a little over three years, I get every bit of my money back.

And then all the money on top of that is gravy.

That's basically all money on top of how much I put into it.

So I took $17,000.

Now I've also bought properties.

Now this is back in 2010 when the market was completely, you know, down and everything was going bad.

Banks were just trying to give away properties.

I bought even another house for $6,500 that rents out for $475.

I still believe I still own that.

I bought another one for $7,800.

So you don't need a lot of money to buy your first rental property.

There are plenty of places in the country where you can buy them for relatively low.

Now they're going to be older homes.

And I have another podcast coming up that I'm going to be talking about the good and bad about a cheap rental property.

You know, the $15,000, the $10,000 properties, because there's some good and bad things about it.

And I've definitely learned my lessons with the school of hard knocks trying to figure out how to actually make money with these really, really low priced properties.

But you can absolutely make money and make good money with these really low cost properties.

So like I said, I bought my first house for 17,000.

Bought my next one, I think it was 15,000.

Next one after that was like 12,000.

So it got lower and lower every time.

But right now, you can still find properties.

Right now when I'm recording this, this is 2018, this March of 2018, and you can still buy properties that are low cost, which would be, you know, $15,000.

You can still buy them for cash and still make money every single month.

Now you got to look for them, you got to build your business around it.

I've done a lot of work to actually build my business where I'm actually making money and not losing money.

Because having these cheaper properties do take a lot more work, which we'll have to get into.

And like I said in the other lesson, other podcast, so what I want you to do is think about other ways that you can use your money for all cash if it's possible for you.

Save up your money, $100 every single month, save up your money.

Maybe if you get an inheritance or something like that, just get that first property.

Because I'm going to tell you right now, every investor knows getting that first property is always the hardest.

And Then once you get the second property, you will start realizing how easy it is.

You know, the first property is the hardest.

After you have that one, second property will come even faster.

Third property come even faster than that.

Fourth, fifth and big snowball that keeps going downhill, that'll go faster and faster and faster and faster.

So that as soon as you, before you even realize it, all of a sudden you're making so much money, you can't stop it from coming in every single month.

You're just making money.

Where I realized, hey, I have so much money coming in, I'm just going to quit my job.

I don't need my job, I don't need the income.

Praise the Lord.

So I said, I'm done.

I'm not working another day of my life.

So that's all cash.

Now I'm going to encourage you that you can put that all cash down and buy those cheaper properties.

But there's also another way which gets me into my next one would be a conventional mortgage.

Now let's say you had that $10,000.

If you bought a $10,000 property for the cash, all out, all in is $10,000.

You bought the property for $10,000 in cash, no other money, you know, no mortgage on top of it.

Well, that's definitely a great deal.

But what if you bought a bigger home, a better home, a newer home that doesn't take as much to fix up.

You know, you bought a $100,000 house, but you put that $10,000 down on the hundred thousand dollar house while you're using other people's money, which I will say is a great thing about rental properties, you can use other people's money to buy properties and make cash flow every single month.

And so over a 30 year span period of time, you're basically having your tenant pay for the mortgage.

Most mortgages are 30 year fixed mortgage.

And the 30 year fixed mortgage is going to be, you know, the normal payments are lower than like a 15 or a 20 year mortgage.

So your 30 year fixed mortgage will probably be, if you buy a $100,000 house, somewhere around $400 a month, maybe $500 a month at the very most.

Then you tack on your taxes, your insurance, your property manager fees, things like that.

And then if you rent it out for $1,200 a month, you're probably going to be making at least 250 to $300 a month.

I have plenty of properties that I make over $350 a month because I bought it, right?

I bought it lower than the normal market value.

And then because of the rent coming in, I have, you know, $1,500 or $1,600 coming in.

My expenses are around $1,000.

I'm making $600 a month.

It's just fantastic to be able to make that much money.

So imagine putting that $10,000 down, buying a $100,000 house with that 10,000 years and somebody else's money.

Now here's a great thing.

The tenant is actually paying off the rest of that house.

Now you still owe $90,000, right?

You put, you buy a hundred thousand dollar house, you put $10,000 down.

Now you still owe $90,000.

But the beauty of it is your tenant is paying that $90,000.

Can you believe that?

They're paying it off.

So every single time you get your rent check, you make a payment to the mortgage.

And the mortgage company or the bank, they take your money and they knock off another month payment.

And what happens is after those 30 years, you own the property, but you only paid 10,000 for the property.

And the tenant paid for the rest of that property.

They pay for all the principal, all the interest, all the taxes, all the expenses, and you still made money every single month.

So getting a conventional mortgage is a great way.

Usually you have to put around 20% down to buy a property.

There have been, I've actually bought properties where I put 10% down, got a 10% loan as well as an 80% loan on top of that.

So it was, you know, 80, 10, 10.

Those are really hard to come by.

Now banks don't like giving those out or if they, even if they can.

But I have bought properties with that.

So there are creative ways to use money to get a conventional mortgage and use the bank's money to buy a property.

Now what I would suggest, if you're into, if you want to look for this, call at least four or five different mortgage brokers, talk to them and say, this is what I want to do.

I have this property.

You basically explain the deal.

I have this property, I have this much money to put down.

How can you get me the funding?

Some people might say, or some mortgage brokers might quickly say, well, I can't, I need 20% down.

You know, they'll say, okay, we're done.

But I have found that you're going to find property or sorry, not property managers, you'll find mortgage brokers that have actually been able to pull these things off.

And the banks are fine with it because they have their own criterias.

Every Mortgage broker.

And every bank have their own criteria for what type of loans they give.

Some are more strict than others.

Some banks are very strict, meaning they don't want, they try not to lose money, they try not to give risky loans out.

And so they don't like lending to low credit scores or a high debt to income ratio, things like that.

But there are other banks that are a little more lenient that would actually give these types of loans.

So call as many mortgage brokers until you find a company that, that's actually going to be able to put the deal through for you.

All right, so the next one, FHA loans.

Now an FHA loan is very similar to a conventional loan, but it's backed by, it's a loan, basically a loan from the Federal Housing Administration, from the government, United States government.

So they back and insure the mortgage.

And so you instead of paying 10 or 20%, usually 20% for a normal conventional loan, the government allows you to pay only 3.5% down.

Can you imagine that?

You know, a $200,000 house, you're buying it for $7,000 out of your pocket and you got that $200,000 house that hopefully is making you $250 a month to $300 or more.

And so it's very attractive way to buy a property because you're putting so little money down that after time or over time, all that $3,500, you're going to make that back in like three, two years, maybe three years at most.

And then you have everything on top of that is just money in the bank, your FHA loan.

There's a downside to getting an FHA loan though is you actually have a mortgage, pmi, principal mortgage insurance.

So basically you have to pay an extra insurance.

Not your home insurance, it's mortgage insurance on top of your principal and interest that goes to the government that pays them.

It's a private mortgage insurance that's going to allow you to be able to pay at 3.5%.

Now let me give you example.

So you buy $100,000 home, you're going to be paying probably around $100 a month extra in the PMI, the private mortgage insurance.

If you pay an extra PMI of $100, well, you just put that in your numbers.

You make sure that you can afford that, that the cash flow every single month will still bring in $250 or more, including that PMI on top of it.

Now if it doesn't, then pass on the deal or go to another deal.

But you always want to offer so that it makes you money every single month.

You want to make sure you account for every expense.

Even if it's a pmi, something like that, you can still have that put in your numbers as an expense.

So you have that covered.

So you're still making money.

So don't let that scare you off from getting your first property.

But three and a half percent down, you know, if you buy a house for $100,000, $3,500, you can easily save that up.

I would hope that you'd be work, you know, work your tail off, you know, get an extra job or something to save up $3,500 to buy your first property.

Start making $250 a month, save that up to buy your next property, and in, who knows, you know, eight or nine years, you're going to have enough properties where you can actually quit your job.

All right, next one.

Now, portfolio lenders is what we're going to get into right now.

And most people think, oh, wow, portfolio lenders are, you know, some people are getting in to real estate investing.

Think about like this, this mythical white whale of a portfolio lender.

How do I get a portfolio lender?

Because they lend, you know, to, to real estate companies like mine or investment companies that invest in rental properties.

You know, they, they are, they're, they're willing to give more, more investment property loans as opposed to, you know, four or just one with an fha, a normal conventional loan, I think it's four, four that you can have at most on your name.

But anyways, portfolio lenders, so they're basically a portfolio lender is a bank that lends their own money.

That's their own portfolio.

So think of your local bank in your local neighborhood.

Not like, you know, those big banks like Chase, bank of America, Wells Fargo, not like that, but think of like a credit union or a local bank or a Citibank that, not Citibank the company, but bank in your city that is just, you know, one or two, two places in your area and they are going to give a loan that is their own private money to you to buy the property.

And that, that's now part of their portfolio.

That's why it's called a portfolio lender.

It's their own money.

Normal banks, if you go to, you know, Chase, Washington Mutual, well, sorry, they're out of business a long time ago, I don't know where that came out of.

But Chase, Wells Fargo, bank of America, all these other companies, they basically give you the loan but then they sell off the loan to somebody else and they make money on that transaction.

They don't actually lend their own money.

So a portfolio lender is a bank that lends its own money.

Now, we kind of think of portfolio lenders as being, hey, if we can get those, that'd be so fantastic.

Well, I'm gonna tell you one, they are great, but at the same time, they're hard to find.

Now they're not so hard to find that you can't find them.

So basically what you need to do if you want to find a portfolio lender is start calling every single bank in the city that you live or in the local area that you live.

It could be the county that you live in.

But call every single bank until you find one that actually does portfolio lending.

Just literally, you know, when you, when you open or call your first person that you talk to say, do you do portfolio lending?

Or can I talk to somebody?

Does commercial lending and portfolio lending, lending.

If they say, no, we don't do that here, you say, okay, thank you, hang up and, you know, move on to the next bank.

But keep calling until you actually find a company that actually does it.

It's not so easy just to say, you know, a Google search and look for portfolio lenders, which you definitely can.

You will find some, some things to pop up.

But the most, the best way is to find a local place in your area that would actually do portfolio lending.

So the reason why it's also better is because banks that are big, they have certain criteria that they need to manage all the way down to the lowest person on the lowest totem pole and make sure that they don't screw up.

And so they have these really strict criteria.

But a bank that is local, that doesn't have so many barriers or levels of management and down to.

So anyways, the main person that makes the decision to loan out the money, he's maybe like one or two people away from you.

So you might talk to the first lender and he goes, let me talk to my boss, who is the one that actually makes the decision.

He sees your business model, he sees the plan, he sees your track record of other properties that you bought and says, okay, I'm going to take a chance on you.

I'm going to give you the money.

And, you know, interest rates going to be this, that, and the other.

The term is going to be, you know, however many years, and here's the money.

And it's their own personal money.

Now just think of them as the mortgage Holder and you've just found a bank that's lending their own money, which most banks don't actually do that because they are able to sell it off.

Alright, so that was portfolio lender.

It's not as mythical as you might think.

You can actually get them fairly easily.

You just got to find a bank that's actually going to work with you that does give those.

All right.

Another one would be owner financing.

It's also termed seller financing.

Could be the exact same thing.

Owner or it is, sorry, the exact same thing.

Owner financing and seller financing are two amazing ways to buy rental properties.

Let me give you an example.

So I have a. I knew of an investor that had three single family homes and one duplex.

Now these three single family homes and one dupleX he wanted to sell.

He was an investor.

He had his own businesses that were doing really well.

He just didn't want to have to worry about these properties anymore.

And he had many other businesses outside of that.

And he just wanted his time that he could, he could focus on his businesses.

And so I said, well, you know, I could buy him from you.

So this is what I'll do.

I'll give you $25,000 cash and you give me a seller financing for the rest of the property.

So the total purchase price of all the properties, you give me seller financing and I'll pay you every single month for that.

And so what happened was he said yes, and over time, basically my mortgage payment that was to him because it was my cash and then he had the note.

So I don't actually have a bank that is actually having a mortgage on the property.

I have the current owner who is now, you know, he has a.

The mortgage on the property has a note against the property because he now has the note.

I don't actually have a mortgage against it.

It's paying him as seller financing.

But it's so much better because I didn't have to worry about an appraiser.

I didn't have to worry about inspections.

I didn't have to worry about underwriting.

I didn't have to worry about really anything because it's just a transaction between me, the seller.

Now between me and the seller.

It's basically him saying, okay, you're good to go.

I'm going to go ahead and give you the loan.

You give me $25,000.

Here's the contract.

We're going to write it up, make sure that, you know, if you default, I get the properties again.

Obviously I'm totally fine with that.

Just what I would do with a bank.

And so the seller is basically becoming the bank, which is one of the best places to be.

That's why there are so many banks, because they make so much ridiculous money.

It's crazy.

So what you would want to do is work with any seller that you can just say, hey, I can buy it from you with financing or getting somebody else to pay.

But would you be interested in the possible aspect of doing owner financing, owner financing, or selling seller financing to where you become the bank?

Well, I'll pay you over the next 10 years.

I'll pay you X amount of dollars over 10 years.

Every single month, like clockwork, you're going to be making so much more money than if you sold it right now.

And you'll make even more money every single month.

And after the 10 years, you're going to be having, you know, X amount more than you were trying to selling it for right now.

And so it is a great way to find a property.

You can even find seller financing where you put, you know, 5% down, 10% down, you know, very little money out of your pocket.

So what I would encourage you to do is as you're looking for properties, ask the seller, you know, why are you selling?

Number one, so you can understand what their needs are.

If they need money cash right now, then seller financing might not work that well.

Unless you can say, well, how much money do you need?

Do you need 20?

Like, this is what I mean.

I could tell my sellers, do you need $25,000?

You need $5,000.

How much money do you need right now?

Maybe I can give that to you and you do the balance being seller financing.

And if you do that, if you find a good deal that you don't have to go through a bank, that's all those fees, those closing costs, the points, the underwriting, all these different fees that you're not going to have to pay on top of, hopefully you're going to be able to work out a decent interest rate.

So I'm going to say go ahead and every time you find a property, see if that's a possibility where you can do owner financing.

Absolutely.

Fantastic way to get properties.

Now the next one, hard money.

Now, this is one where people think, and I thought the same thing.

When you think, talk about, or when I talk about or hear of hard money, I think of, you know, Jimmy, the money lender down the street that has a bat that if I don't pay my monthly or weekly, you know, they probably charge by week.

If I don't pay the weekly fee or my note payment, he's going to come down and break my legs and then if I don't pay anymore, he'll do even more damage, you know, trying to get me to pay.

And so that's not what a hard money lender does.

You know, you probably can find those, but I would say don't go to them.

So a hard money lender is a type of loan that a private business or a private individual, like a private investor will give money out for real estate.

So it wouldn't be like going to, like I said, go to Jimmy the Wolf, we get with a bat.

It'd be actually going to companies that do lend private money.

Now there are some drawbacks to this.

Usually hard money is for getting into a property really quickly.

So, so you can either flip it or refinance it or find some other way to pay off that hard money loan and gets you into a property, fixing up the property and getting you ready so that you can do other ways to get financing.

It's a great way to get started if you don't have any money.

So let's say you have a property that you want to buy, you don't have any money to buy it, but you talk to a hard money lender and a hard money lender says, hey, I'll let you, I'll lend you the money for the property, but if anything happens, I get the property.

But there are some drawbacks to a hard money.

Now the hard money loans are basically very short term loans.

Like I was saying, it's to get into a property and try to get out either through selling it, you know, flipping it or actually refinancing the property, taking the money from a bank, giving it to the hard money lender so they get paid off and then you have a long term financed property.

Now with a longer term finance property, you no longer have to worry about the hard money lender.

You now have the bank that has you know, maybe hopefully a 30 year note where it's 30 year fixed, it's not going to go up, they're not going to, you know, at the end of, you know, three years it's, they're not going to want their money back.

But the drawbacks come down to hard money.

A few things.

Number one, very short term, anywhere from six months to three years maximum, they want, they want to turn their money over very quickly.

Now they also charge very high interest rate.

It could be as high as 15%.

And depending on how lenient the hard money lenders are, but they're in the business of making money and they make their money through points where let's say you're borrowing $100,000 where they're going to charge you two points, which is basically 2%, 3%, 4%, whatever the hard money lender is actually giving.

And so let's say, or asking, or you know, taking.

So let's say you're buying $100,000 house.

He says, well, it's four points to buy the property.

Well, it's 4% of the purchase price, so that'd be $4,000.

That goes to the hard money lender just for the privilege of borrowing the money.

Now if you're borrowing it for six months, then you're paying $4,000 for six months use of that money and you need to pay it back within six months.

It could be a year, it could be two years, whatever it might be.

But your goal, if you ever did get a hard money lender, use a hard money lender, is to get into a property and know beforehand how you are going to get back out of that hard money loan and get into something more permanent.

So here's an example.

You see a house for $100,000, you want to buy it, but you go to a, you don't have the money, the cash to buy it.

So you go to a hard money lender and say, here's all the deals, or here's all the numbers for the deal.

I want to borrow money for two years and I'll pay it off before the two years is up.

So he'll give you the, you know, okay, 15% is the interest rate.

You're going to pay four points on it and I'll give you two years to pay it off.

And this is how the monthly payments are going to be.

You work all that out, but before you even sign on that, make sure that you can actually get a conventional loan right out of that.

So within six months, you know, you bought the property after six months, you got it fixed up, you have it rented out, and by the seventh or eighth month you go out to the bank and say, hey, I have this property, it's my property and in six months, I've owned it for over six months.

So it's been somewhat vested where banks don't want you to.

Little side note, usually banks want you to own the house at least six months before they would lend money on the property.

I've actually run into that many times.

So after six months you can refinance the property, pay off the hard Money note, possibly even take money out and put it in your pocket, which I've done.

And you can actually have a fixed loan instead of the hard money loan.

Now you paid a few points, you paid high interest on it, which is true.

Yeah.

But now you have a property.

Now you have the ability to grow your business into a bigger business because you now have one property, maybe two properties, three properties.

But this is a way to actually get a property when you possibly could not have.

Now I'll give you a tip on how to find hard money lenders.

Super simple.

And this is much easier to find the portfolio lenders, whatever state or city you're going to start investing in, let's say you're going to start investing in Los Angeles, which I would absolutely not recommend.

The prices of the homes are ridiculously out priced compared to how much rent you can bring in.

You know, let's scratch that.

I don't want to talk about la.

You're going to lose money if you invest there.

At least my opinion, I don't want to invest there.

So let's say Boise, Idaho.

You're going to go to Boise, Idaho and you want to start buying somewhere in Boise area or outside of there.

So you go to Google, Yahoo, Bing, whatever search engine you want, type in Boise hard money lenders and search.

You're going to find plenty of Boise hard money lenders.

There are actual reputable companies and you can hopefully see their reviews.

Go to Yelp, check out the reviews.

But I've actually worked with companies that do this.

They give you the hard money lender money.

They give you the hard money.

They're the hard money lender.

But they also have the ability to get a conventional loan.

So they do both, they do the hard money lending and at the same time they qualify you for a conventional loan so that after six months they already have the ability to put you into a conventional loan for you.

Rather than you finding a conventional loan and a hard money loan, trying to piece it all together, they will actually qualify you for both, get you in one, so you get the property, then get you into the conventional loan afterwards so that you don't even have to do that headache of finding another loan.

They've actually done all the work, they pre qualified you, they've already done everything.

So you're going to find lots and lots of hard money lenders.

This is a great way to jump into properties and just make sure that you understand the, that you know, after six months the note comes due, whatever the term is, six months, one year, Two years, three years, the note comes due, which means you actually have to pay the entire amount off.

But what you must do is figure out your exit strategy beforehand.

How am I going to get out of this hard money loan beforehand?

All right, next, let's move on to private money.

Private money would be any money that from basically from anybody that you know.

So it could be friends, could be family, could be an acquaintance, could be some business owner that you've talked to that you know and say, hey, I have this deal.

Would you be interested in investing in it?

So it's basically a way to find money that is in your relative network of influence.

You know, the people that you know.

You talk to the people and you say, you know anybody, your friends, family, your uncle.

Let's say you go to your uncle and say, hey, I have this deal and I need $25,000 for this deal.

And this is what I'll give you.

I'll give you 10% of the deal or 50%, whatever you want to offer, as well as I'm going to be able to refinance, pull the money out, pay you back within two years, basically using them as somewhat like a hard money lender.

But you're able to bring them the deal, put them so that they are the banks, and you're paying them the money.

So it's super touchy to talk about money and business with family and friends, but this is a huge option.

I'll tell you.

I've been blessed to have my dad when I was getting started, bless me, to be able to borrow a little bit of money to buy a house.

And, you know, I was paying him, I think it was like 9% interest.

So I was actually paying quite a bit in interest, but I was able to borrow the money and then pay him back.

And over, you know, the course of three to five years, I eventually had enough money where I paid off where I didn't own that money anymore.

But that was a great way for me to build my business is by borrowing from my dad.

Now, not all of us have a dad that can get that money, but you may have somebody, you know, maybe somebody you don't realize yet that could possibly be an investor with you and your business.

What it comes down to is you being vocal, not necessarily asking everybody, hey, can I borrow money?

Hey, can I borrow money?

Hey, can I borrow money?

Don't do that.

I would say you're going to get very irritating very fast to many people, but what you can do is tell them that you're an investor you invest in real estate, you invest in rental properties.

I have, because I quit my job because I have so many properties, because I've been doing it for so long.

I have so many people that say to me, hey, if you need some money to invest, I want to invest my money.

I want to get started doing this.

Just come down, talk to me, and I'll give you money.

And so what happens is, because I have talked about it so much or people know that's what I do, invest in real estate and rental properties.

They look to me and say, hey, I'm going to invest in you.

Not necessarily the deal, but I'm investing in you because you have a track record, because you have experience, because I want to make money.

And so what people are going to be doing, private money, people, your friends, family and other people that you know, they're really investing in you also in the deal, but they're trusting that you're not going to lose their money, you're not going to waste their money and all that sort of stuff.

So being able to find private money is a great way to grow your business, especially if you don't even have a business to start.

If you can borrow some money so that you can get start your business and get your business started, then refinance the property, pull money out, pay off the private money, then you have a property.

So use private, private money.

This is another tool in your toolbox of how to find and fund your rental properties.

Another one would be home equity lines of credit.

Now, this would also be considered a heloc.

That's the acronym for it, Home Equity Line of credit.

So that's also home equity loans as well.

Anything about your equity borrowing against the equity in your property?

Now, there's two things.

One is refinancing, pulling all the money out of the property, and refinancing, pulling more money out on top of it.

So let's say the property's worth $200,000.

You owe $100,000.

So you have what it's worth, but you pull out $150,000 total.

Well, $100,000 goes to refinancing the total mortgage of the first one.

Then $50,000 comes out and goes into your pocket.

I've done this many times, and I've actually taken that 50,000 and bought more properties so that I can have more money coming in.

So now you can do that too, where you pull more money out.

Now, this is not home equity loan or HELOC line of credit, as well as the loans that's not what this is.

This is a second on the property.

So let's say the same property, Its value is $200,000.

You owe $100,000, but you want to get a home equity line of credit or a home equity loan to take up that equity.

So they're going to give you, let's say, round numbers, $50,000 home equity line of credit or home equity loan.

So you basically get a loan for $50,000.

That's a second note.

Like there's a first note, which is the 100,000.

Second net would be the $50,000.

Now that $50,000 goes in your pocket.

If it's a home equity loan that you can spend however you want, you have to pay on that every single month because you now have a second mortgage.

Or if you have a home equity line of credit where it's like a credit card, you basically have your house like a credit card.

If you pay somebody, you know, $10,000 to fix up a house, well, as you pay that $10,000 down, eventually go back down to zero, like a credit card, and you won't be charged interest.

Home equity loan is basically, you're pulling out all $50,000 and you're paying it off over the term, you know, 20 years, 30 years or whatever it might be.

So these are two great ways that you can actually use the equity in the houses that you own that you know, not just your personal residence, which I would recommend because I've done that many times, but your other rental properties.

You can actually use the other rental properties, the equity in those, to buy more properties.

It's absolutely fantastic.

Now, that was the heloc, or the home equity line of credit, and the home equity loan.

Now, another one I want to give you is partnerships.

Now, I'm going to say, personally, I'm not a big fan of partners, because you split.

Okay.

Really what it comes down to, you have 100% of liability still, even though you have partners, you don't take 50% of the liability.

You still have 100% liability on you, but you take 50% of the profits.

If you have a partner or 60, 40 or 70, 30, whatever you guys work out the partnership to be.

But it's better to have a property than no property.

And if you need to have a partner, bring in a partner that has the money to buy your first property, then absolutely do it.

Because once you get started, then you can hopefully buy your partner out, or they can buy you out.

You have more money now.

You can buy another property.

It's a way to get you started.

So even though I gave that little disclaimer saying that I'm not a big fan of partnerships because you have 100% of liability if it's the only way to get started.

Absolutely do that.

Get started buying investment properties.

So partnerships are basically finding somebody else that either has the money or the experience or the deal or whatever it might be, and working together, either giving them equity in the deal or basically giving them a loan on the property.

And so what you do is you have synergy.

Synergy is a fancy word for basically the creation of the whole of the entire thing is basically greater than the sum of its parts.

Fancy way of saying that if you have two people separate, they produce, you know, 10 and 10.

So person A produces 10, person B produces 10 as well.

Well, separately they produce 20 total.

But if you put them together, they now produce 30 because they work better together, they produce more together.

So that's really what comes down with partnerships.

Now let's say if you had your own money and you wanted to buy a duplex, that makes $1,600 a month, total purchase price being $250,000.

20% down payment would be $50,000.

But let's say you had a partner, you had three partners with you, you each had $50,000 down.

So instead of buying that $1,600 a month passive income duplex, you know, that's $1,600.

You make a month purchase price of $250,000.

So instead of having $50,000 in one deal, now you have three people with $50,000.

Not saying you could find that, but if you did, you would have three people with 150,000.

Sorry, $50,000 each comes out to $150,000.

Well, that 20% down payment will get you to be able, will allow you to buy a $750,000 property.

Imagine an 18 unit compartment complex with $8,000 in monthly rent being split up between three people.

Because you each put in $50,000.

Your synergy together makes you even more money than if you were separate because you guys work together.

So I would suggest looking into other people that are interested if you need to find a partner.

If you need a partner because you don't have the money, you don't have the experience, resources, whatever it might be.

Strongly recommend start looking for other people who are currently investing, any other person that is actually interested in investing.

Because if you work with somebody else, you spread out all the extra work.

You know, finding property managers, finding realtors, finding Contractors, you split up the work, you also split up the money.

You know, if they put in 50,000 or even $5,000, you have three people putting $5,000.

You have $15,000 now.

Now, to put down on a property.

So getting a partnership, having a partner, or many partners is a great way to find properties.

Sorry, to fund properties.

Now let me give you another one.

So another one would be credit cards.

Now, I know what you're thinking, okay, Credit cards.

Buying a house with credit cards.

Absolutely.

In fact, I've actually bought two.

Can you think how stupid that is?

I actually bought two houses with one credit card.

I'll tell you what happened.

So as I was in 2009 or.

Sorry, it was 2008, right before the crash.

It was literally like three months before the crash hit, I got a letter from a bank that said, hey, open this credit card.

We'll give you.

I think it was like $15,000 or something like that.

But we're going to give you a low, low, low interest loan for the life of the balance.

So if you pull out money, so it could be cash out or purchases for the life of that cash out, I'm going to get.

We're going to give you.075% interest.

And I thought to myself, 075 interest on money that's absolutely ridiculously cheap.

Like, I'm hoping to get a 4% banknote on a property, you know, a mortgage for 4%.

This is 0.75.

Sorry, 0.75.

So it's not even 1 point or not 1%.

I said, that is cheap money.

They're actually paying me, because of inflation, over 3% a year.

It's average out 3% a year.

They're actually paying me.

They're losing money on the deal.

So I said, absolutely.

So I took out the credit card, wrote myself a check, pulled out all the money that I could and put it in my bank account and then bought two properties.

If you know my story, I started with really, really cheap properties.

One property, the lowest I think I bought was like $6,500 for a property.

So I bought two properties with this one credit card and this one credit card.

The monthly payments, I think was like $280.

But with those two properties that brought in, I want to say, $500 a month.

So I was still on top of property management fees, insurance, taxes, things like that.

I was still pocketing with those two properties, I think it was like $500, maybe 450 somewhere around there with the credit card payment.

Now, since Then I paid off the credit card.

I got all.

I still own those properties and they're making money hand over fist now.

But that's another way that you can get creative if you can possibly figure out a way to find cheap money.

And you know, if one comes in the mail, which this was like I said before the crash, after the crash, that was dried up.

I never see those anymore.

But who knows, they might come out again.

That could be another potential way you can find another property or fund another property.

So let's put all together.

So basically putting this all together is finding different ways to get creative.

You know, maybe part of it could be you have cash and another part would be conventional loan.

The other part would be seller financing.

Other part was you used a credit card to help you, you know, fund the cash portion.

It could be many different ways.

It could be even something where you have 10% cash down.

The seller financing gives 10% of the seller financing and then you get 80% loan to get the deal.

It could be any of these many different ways.

Getting a hard money loan and then moving that directly into a conventional loan.

It could be any of these fantastic ways to put them all together to find it and fund a property.

Now I'm going to encourage you to get creative and to think of how you can solve a problem, not how a problem becomes a roadblock and stops you from going further.

Hey, if you can't do it with just conventional, figure out, maybe ask for seller financing.

Maybe.

See, is there a way I can use my credit card?

I would say make sure that it's the right credit card that you use.

Maybe it could be a hard money lender.

Whatever it might be, work all these together so that you can fund the properties.

Because once you have a deal, you don't want to let it go.

Get creative and think of, hey, I got to solve this problem.

I'm an entrepreneur, I'm a business owner.

This is a problem I need to solve.

If I solve it, I make a ton of money.

If I don't solve it, you know, hey, there goes the deal.

So this has been the episode number two on how to finance your rental property deals.

Like I said, this is heavily, heavily interested.

It's heavy interest in buy it from many, many people.

So many more people like this is twice visited over compared to every single page on my blog because people are so interested in this.

And so I have a lot more on my blog and in my courses that teach about how to actually fund properties.

This basically just scratches the surface on all the funding options that you can probably get.

And I'm going to encourage you to look into furthering your knowledge and contacts and networking of people that might have money.

You might even get an angel investor.

Not necessarily angel investor, that would be like a business, but an investor that has cash, that only wants to invest cash, wants to make a 20% return on his money and then you pay him off.

You know, be somewhat like a hard money, a cross between hard money as well as private financing.

But you might have a private investor if you can find somebody like that.

There are many different ways to fund properties and this was the second episode of the Master passive Income podcast.

Thank you so much for listening with me and I hope that you get started.

I hope you find that first property, second property, even the 10th property.

I want to be there to help you through there.

Thanks again for listening.

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And that is it for today.

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