Investing Ideas thatWork


by Michael Zuber

hen I started buying rental properties, I assumed you had

I took this information to the sell- er and asked if they could help out. Maybe they would be open to taking most of their cash now but leaving 10 percent of their equity in the proper- ty via a second mortgage. I would pay them a fair interest rate and have a five-year balloon so they would eventually get all their money. This worked and Boom! we had another rental unit. On our second apartment deal we found a seller who owned the property free and clear. He had owned it 30+ years and was ready to live the good life. At the time we had never bought anything over $500K but there we were, standing

in this apartment courtyard staring at all these units saying we want it but we don’t have a huge down payment. The seller said he didn’t want a lot of money right then but instead wanted just enough to cover the real estate transaction costs, realtor fees, etc. and then monthly payments for 10 years. To say we were surprised was beyond belief as we had no idea about why sellers would want to car- ry such a large note. Later of course we learned why sellers want to do this—for tax reasons. After negoti- ations we agreed on a small down payment and interest-only terms for 10 years that would make him happy


to put at least 20-25 percent down to get approved for a loan. Saving mon- ey for a huge down payment is hard and takes a lot of time. I could have never built my real estate portfolio without expanding my thinking and getting more creative. Simply said, I wanted more rent- als and saving up 20 percent each time couldn’t be the answer. Here are few creative ideas I executed back in the day. On our second property I wanted to put only 10 percent down, but I could only get an investment loan at 80 percent of purchase (first mortgage).

24 | think realty magazine :: may 2021

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