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  • Writer's pictureJared Jones

How I bought this home with $0 | JARED JONES | JONES GROUP REAL ESTATE


Buying an investment property or a home for your family, you can still buy with no money down today.

Hey there. Jared Jones, broke, owner of Jones group real estate here in Florida. Just want to walk you back real quick and take you down memory lane. If you are going to get home, you are going to use OPM other people's money. To some degree, the house that you see here was purchased by me with no money down. Also, this house also purchased with no money down. Now, these were my first couple of home purchases that I made as a young adult. It's always about other people's money. So when it comes time for you to actually purchase your own home, it's a matter of, am I going to take all of it from an institution or am I going to take part of it from an institution and part of it for my savings or part of it from my uncle or, or work with partnerships.

If you're an investor, you know, as an investor, if you find a great deal, someone's gonna come in on that deal with you. There's always money for deals. So, that's the thing too, is, is that we're talking about the idea of actually getting homes and personally, I mean, I've, I've had deals where literally I was equity in earner on flip multiple times. Probably I've done this more than a hundred times. We've done equity earning on a flip that I had not a dollar into it. Okay. I'm going to have time and expertise in on it, but I not have any of my own money. So whenever you're talking about buying with no money down, it's always a reality of OPM, other people's money. One of the things that I oftentimes, you know, feel the sense to tell buyers is you really usually only have to put money down on the first purchase.

If anything, once you're actually in real estate, once you sell a house, theoretically, you should be receiving the money to take to the next house. And so moving on to bigger homes becomes easier once you get into the first one, but sometimes money's tight and sometimes having some cash assistance to get into the first property, get out of the rental situation is necessary, or maybe you're trying to do an investment purchase and you've got a great deal, but you really would like to keep your own money out of it to enhance the return. So today I'm going to take you through every single, no money in the process that I know of to help you buy or sell your next piece of property. Number one, the simplest one, the VA loan. So this is a dumb moment because if you're in the military, you primarily know you have this.

And if you do not have, eligibility for a VA loan, then you would need to sign up and join the military, but they will actually lend on the entire purchase price. Number two, similar to the government warranted loan with the VA offers. You can get a USDA loan USDA, as you know is an acronym for the agricultural administration. They have products to inspire investment in purchasing in rural areas and surprise central Florida has got a lot of land and purchase opportunities where you can buy a home that actually would qualify for a hundred percent financing. Now the most of the eligibility for this is in areas where there is a bit of more rural we're out of the town field. So as you can guess, and I'm going to show you an onscreen map. This area that's highlighted in orange, which is really the more suburban and highly urban areas of downtown Orlando, uh, represent areas that would not be lendable by the USDA, but all the areas outside of the orange are absolutely lendable.

And you can buy in some of these areas out West, East, South, even, and get yourself into a pocket and understand. I mean, urban sprawl seems to be growing in all directions. So, you know, whether or not you feel like you're buying on the country. Now, it won't be that for long. And honestly, most of these places, many of them are opportunities where you're really not that far out. So some things to note, depending on the area and the community that you actually move into, there are loan limits by County, throughout Florida. And there's also an income threshold, so that if you have too high of an income, you may not qualify, but the income threshold is pretty high. So I will say that it's very unlikely that most folks in this category will actually reach it. So the next opportunity would be down payment assistance.

Each County has their own goals for down payment assistance funding. They have different programs that, that you want to check in on. So every single County will be different. They're going to have different eligibility requirements. They're based on socioeconomic reasons like how much you make things of that nature. And they're also going to have a threshold for how much they have in funding. Anyone gave time with COVID you definitely want to check before you actually depend on this particular piece, because they have struggled for funding. You also probably heard in the news that Biden is bringing a $15,000 tax credit. So that's a tax credit. That's not going to be something that you're gonna use upfront. So you might be thinking, Hey, I'm going to get some down payment from that. It's going to be a little bit different, but if you are buying a home as an investment property, you are hearing about the burn method for buying homes.

So one of the number one ways that you can actually buy a home without any down payment money out of pocket is using the bird method. So the burn method stands for buy rehab, rent, refinance and repeat. Okay. So the first step, obviously finding a home now purchasing under the burn method, let's say in theory, it's worth a hundred thousand dollars in the current form. You buy it for 75,000, you put some money into it. And then the thing is worth 130 or 140. So at that purchase price, you are in it for 50, 60%, something like that, of what it's valued at, you remodel it and then you borrow back out. Okay? So the downside of this one is you are going to need working capital because obviously, if even if you used hard money loans or something like that to purchase the property, you'd need a down payment plus repairs, then put a tenant in it.

You start getting paid back and then you refinance out of the situation. So using the burn method, the theory is at the end, when you've increased the value of the home, you go to a financial lending institution and actually take out a loan for every dollar that you've put into the house. So not only do you get your purchase acquisition money back, but you also take back all of your repair money, essentially being into the home for nothing. And theoretically, you've bought a really cheap and you're renting it out. So you're getting a high return. The downside of the burn method in today's market is there's no inventory. So the chance of you actually finding a home at such a low price is going to be very tough, but nonetheless, it is there. The other thing that a lot of buyers who are tight and cash trap, the most common thing that we're seeing is that they will save seven to $9,000, okay.

In that range. And they will get into the market and get qualified for let's say $300,000. Now with that amount of cash, they will pay the required down payment for a loan product like FHA. And just so you know, it doesn't have to be FHA. FHA is an acronym, for the federal housing administration, which is a company that backs loans, that is one of the most common entry-level loans so that there's there are guarantees. And so that money could be easily made for people without a lot of down payment money. And actually, it really affordable interest rates. So what I'm saying is that if the borrower saves enough for the three and a half percent down required for FHA, there are also products available in the conventional mortgage market that are 3% down, but three, three and a half percent down, you can get a 30 year fixed, nonweird loan.

That's got an incredible interest rate. And then with the rest, you would need, uh, you could actually ask a seller to contribute towards your closing costs because there are two components that cost you when you close on a home, okay. It's any required money down and it's your closing costs. So the seller can contribute in most cases, several percentage points to your closing costs need prior to close. The challenge right now, though, I will tell you, is it depends on the marketplace. You're in, to get into a situation where you have very little cash involved. You are going to be relegated to the bottom areas of the market, where there might be more supply available for you to shop in. Right now, inventory is so tight. Then in the high-demand areas, you will need your own down payment and you will need cash and you will need a willingness to, in some cases, bid up a property to get it.

So the bad news is that when you're shopping for a home, the good news is they're going up so fast. You know, I have a person call me and say, Jared, my, my house would have 6% more than than I saw it compare for a month prior. You know, and again, this is one person talking to me in the last, you know, week. I mean, the market is, is rapidly appreciating, but it's putting the squeeze on buyers, but hopefully, all this helps you understand, you know, USDA is a great option. FHA has a low-cost option. There are also many loan products where you can get a small down payment, gift it to you.


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