This is the second article in a series about no money down deals. 

Something that is implied by the term “investor” is that you use money to make money.  The problem with this approach in real estate investing is that most people I know have finite amounts of money.  Hello! 

If you put a 20% down payment on every piece of real estate you buy, you will soon be out of money. 

It’s even worse if you have to do a bunch of repairs to the property.  That’s even more money that you will have tied up in the property.

So how do the pro’s get arround having down payment and repair money tied up in the property? 

An alternative approach that’s I’ve used for years is to have some working capital that I recycle.  The beauty of this approach is that I don’t have my working capital tied up for very long. 

Phase 1 of this plan is to buy a property with cash.  Usually it needs work.  Sometimes, it needs LOTS of work.  Again, that requires money.  I’ll get that work done on the property so it’s move-in ready. 

Phase 1 takes anywhere from 2 to 6 months to complete. 

Then I’ll move to phase 2.  During phase 2, I’ll refinance the property once the work is done.  I’ll usually do this with a small, local bank.  True, that does mean that you have to have some decent credit to make this one work. 

But once you’re finished with phase 2, you have your original working capital back all over again. 

Not only that, but you have a property that is making you money. 

In Part 3 of the series, I’ll be telling you all the ways that you can expect to make money on this type of cash flow property.