How To Finance Rent2Rents “No Money Down” Property Deal
In this article I just want to give out a message on rent to rent because it’s possible to do a no money down deal and it’s possible to buy properties using other people's money.
All these things are simple and possible similarly to learning how to drive which is a simple thing to do but if you mess it up and you don't know what you're doing, that’ll end bad for you.
Can this cause you to be worse off than you were?
Potentially yes of course. If you do make a mistake and you lose money, take it as a lesson.
I just wanted to put out a little article about rent to rent and explain why I don't think that you should generally speak in unless you are really smart and unless you're really good at rent to rent and you've been trained meaning that you've got a power team on board.
I don't think you should find a rental rent and then ask somebody to fund that rent to rent deal and give them a fixed return on investment. This happens all the time as people find rent to rent deals with no money, they get scammed and say “oh this rent to rent deal is going to make me a thousand pounds in a month!”
Maybe it will and maybe it won’t especially if you don't know what you're doing, it's your first deal or you've got no good people around you and you've got no mentors and trainers to show you what works and what doesn’t.
Get Knowledge First
A lot of people read my articles and watch my videos or read a few books and then suddenly go looking for a rent to rent deal. it's actually not that great and what happens is that they borrow money from someone or put it on a credit card.
I'm not saying this is bad if you know what you're doing but if you don't know what you're doing, then this could be devastating.
If you borrow the money off someone and then what happens is, this person says oh okay well how much are you going to give me?
You're so confident this rent event is going to give you loads of money and you tell them that “I’ll give you back 15% interest a year” which is really high by the way and then I’ll give you your money back after a year because you're so confident that this rent event is going to work and then what happens is you take this rent deal, you borrow five grand or whatever you need off of an investor who's going to get that fixed interest, you sign a contract, you guarantee that you'll give it to them within the stated time, you then put that into the rental rate and then the rental rent goes wrong and the landlord pulls out
You can't rent it out for whatever reason and it goes wrong or you have to give It back because there's an issue with the leasehold and then it's like okay what am I going to do now?
You've got no rent to rent or it's not making money and now you have this debt to this investor of five thousand pounds and then you end up having to just work really hard on your typical job, pay the investor back or you tell the investor what's happened as you can't pay them back and you end up getting taken to court and sued.
This can happen by the way to anyone when you don't know what you're doing and don't have the knowledge but there is a solution of course as part of the solution is to get educated and understand how rent to rent works.
Offer to Give Guaranteed Rent to the Landlord
If you know what you're doing, you can do a rental event and say to the landlord “listen, i'm going to give you a guaranteed rent for five years and i'm going to do this but part of the condition is that I’ll pay rent in arrears” which means that you don't pay any upfront rent and you don't even pay deposit as you can take the deposits off tenants.
You can also lease the furniture instead of buying it.
There are ways that you can structure a rent to rent whereby it’s pretty much no money down deal but sometimes you're going to need money for the deal because it might sometimes be a case of, well, there is a little bit of money needed here and there and so do you walk away or do you raise the finances?
What you’ll do as a beginner is of course raising the finances because I don't want to just bring you problems. Many people just give you problems and you'll end up working a job until you're 67 and then you're retiring of what you couldn't afford to live on in the first place after working 40 years for 40 hours a week and therefore, I don't want that to happen as I want to give you a solution right here.
Joint Venture Instead of Borrowing
Instead of borrowing the money from an investor, you ask an them to joint venture with you.
There's a massive difference between that because if an investor joined ventures with you and this investor needs to be someone that understands the industry, then there's no risk for you because if the deal goes bad, well, it was their deal as well as your deal and that needs to be done we'll go 50 50 on the profits.
If it succeeds, you're going to put your 50% profits aside and you're going to let that grow and then when it grows to five or six grand, then you're going to do it yourself but this time you're going to have 100% but if it goes bad, that's a problem but at least you're not going to be left worse off than you were because if it goes bad, it's like okay well you've lost your time and you might be disappointed but you've not actually put any money into it or gone into debt to do it because you've got a joint venture on board.
I honestly believe it's so important to go crazy and put offers forward and stuff but I cringe when I hear stories from estate agents as I used to be an estate agent but honestly, I think its important to get knowledge on these stuff first.
I'm teaching people with my online trainings as I run courses and teach legitimate skill which is how to basically build your property portfolio as an entrepreneur and you can start most businesses without putting any money down and therefore, it's about how to be creative and I teach that and it works as it worked for me when I started at 17 years old with no money and now i'm 29 and I have a very big property portfolio and everything I teach is just everything that I’ve done.
Learn what to say, get a business plan, write down your goals, find out what you want, tell people what you want, be clear and don't just be around the bus but at the same time don't say i'm looking for a no money down rent to rent. Find out what the landlord wants, give it to them, make sure there's a break clause, make sure the contracts are right, bring on a joint venture partner if you haven't got the finances, someone who knows what they're doing and do it properly.
Most importantly, what I don't want to do is to make it so complicated and hard that you think I’ll forget it i'm not going to do it and then just do a job forever because a job is harder as I’ve had both; I’ve had a job, I’ve had a business, I’ve been self-employed, and I’ve been an investor and therefore, if you're going to work hard, you might as well get rich and I hope you found this article helpful.
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