How I got two rental properties for free
Not only did I get my last deal for $0 down, but I also got two rentals for free
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In the last edition of The Leonard Letter, I shared how I got my last rental property for $0 down. In this newsletter, we’re going to dive into that a bit deeper and take it a step further.
Before we do that, I want to make it clear — I’m sharing these deals with you NOT as a way to brag or boast, I really could not care less about that. Rather, I think these are great learning opportunities for people just getting started and can likely be motivational. I’m sharing the details in a way that I wish I had access to when I was first getting started.
Remember, I’m not some multi-millionaire with 100’s of units. I’m a 26-year-old kid trying to figure it out, one rental at a time.
Not only did I get the rental we discussed previously for $0 down, but I, technically speaking, got two rentals for FREE.
Here’s how:
In the last deal we looked at, I got it for $0 down, right? But what wasn’t included in that calculation was the EQUITY that I was also receiving. If you look at the numbers below, you can see I left no money in the deal. However, since the appraisal came in at $93,000 and the refi loan amount is only about $79,000, that means I have about $14,000 in equity in the deal, AND put $0 down. So, essentially, I was paid $14,000 to buy this strong-cash-flowing rental.
Now let’s take it one step further. The rental I purchased before this one, also in Texas, just down the street, required a $14,000 down payment.
This means my business partner, Ryan, and I put $14,000 into our previous rental in the form of a down payment, then got $14,000 in equity for free in our most recent deal. If you net those two together, we got very strong cash flowing two rental properties for $0. (technically $50, but practically $0 for illustrative purposes)
On top of that, the previous rental has provided us cash on cash returns over 30% for two years now.
The first few deals are hard. You have to grind it out. You have to get creative. Once you do, they start to build on each other. When we bought the second deal, we hadn’t connected all these dots, we were just trying to buy more good deals.
Then, I stepped back and realized what we just did, and I have to say, it’s exciting.
The beginning is hard. The beginning was hard. It took two years before we got our second deal, but here we are now.
As I said at the beginning — please remember, I’m not some multi-millionaire with 100’s of units. I’m a 26-year-old kid from a blue-collar family trying to figure it out, one rental at a time (Ryan is the same way — he’s 28).
I want to also remind you of the three key takeaways we discussed in the last newsletter, which are the same for this one:
People doing these types of deals aren’t “special” and it isn’t a scam. Trust me, I used to think it was. It’s not, and it’s possible for you too.
Deals are out there, even on the MLS. Every deal I’ve bought, and continue to buy, has been directly off the MLS. Everyone else has the same access to these deals I have.
I don’t try to time the market anymore. If I find a good deal, I buy it, and I will continue to do so.
If you have any questions about this deal or our process, you can put them in the comments of this newsletter, DM them to me on Instagram, or respond to this email.
I would also like to take a second to extend a very special thank you to the first sponsor of The Leonard Letter. Because of fantastic sponsors like Grant from Norwood Energy, I’m able to continue bringing all of you guys great, free, educational content.
Norwood Energy drills and operates, profitably, oil & gas wells with a 90% success rate. A disciplined and economically-efficient approach provides investors the opportunity to benefit from a lower price point than most industry-level deals.
Hear more about Norwood Energy’s business here, or contact them directly at (817) 600-4246.
All the best,
Robert! This is definitely motivational for someone like myself; my husband and I are working on out first deal and now that we realize it won’t be our last we will have to get creative with financing. Thanks for sharing!