I’m going to share something with you. Number one: you always need money to invest in real estate. It does not have to be your money. That’s what they are talking about generally. You need money but it doesn’t have to be yours.
For instance, let’s say that you are buying a property that is worth $200,000 (this is just an example; I know that it is very hard to buy properties in the GTA for $200,000 but there are still places where you can buy properties $200,000 or less, like Kitchener-Waterloo). In Canada, as an investor you need to put down a minimum of twenty percent. So you need forty thousand dollars as a down payment. Then the bank will lend you the balance, $160,000 in this case. What would happen is you would get the $40,000 from either private lenders, a hard money lender, a line of credit or something like that. Now that you are borrowing your down payment and you are getting money for the mortgage from the bank none of your money has been used so that becomes a no-money-down deal. That’s one way for you to utilize all those resources. You can find these people. There’s private lenders, hard money lenders and joint-venture partners in, a private investment clubs and real estate investment clubs. These clubs often advertise. In fact they advertise on the internet and in the newspapers as well.
Another way to make money is what they call vendor take back. Vendor take back is very simple. If there is a property out there that is fully paid for and the present owner is not happy with having renters or having a rental property, they may lend you one hundred percent of the mortgage. They just want to get positive cash flow every month from you while you look after the property, you look after the upkeep, you look after the renter.
Lastly, the assignments. What an assignment is is simply this: if you don’t have lots of money and you don’t have good credit what you do is you put a property under contract and have an assignment clause. What an assignment clause means is that you can take that contract and you can assign or transfer that contract to another person for a fee or for a higher price. As an example, if you buy a property for $200,000 and the estimated value is $240,000 because you got a good deal, you would then go to somebody like myself and say, “Sunil I have a property that is worth $240,000. I bought it for $200,000 and I can give it to you for $210,000.”
I might say “OK I’ll buy it from you.” This way you didn’t need any money. You didn’t even get a mortgage and there were no closing costs for you.
These are some of the ways that you can actually invest in the Toronto area or in Canada without using your money. I look forward to seeing you soon.