This section reviews eight nothing down techniques involving seller financing.

Technique No. 1 The Ultimate Paper Cut

An investor in Milwaukee was able to acquire a $48,000 triplex from a banker who not only arranged for a new low-interest first mortgage, but also carried back virtually all the remaining equity in the form of second at below-market rates. Another investor in West Palm Beach, Florida, picked up a single family home for $66,500 by putting on a new first and having the anxious seller carry back all the rest of his equity ($36,500) for five years, no payments, no interest. Both of these investors were using the technique known as – “The Ultimate Paper Out”. Here is how it works.

When we are talking about buying or selling a piece real estate, we are really talking about the problem of defining and dealing with the seller’s equity. Equity as a concept is straightforward enough. Everyone knows that it represents that portion of the value of a property that is not encumbered, that belongs lock, stock, and barrel to the owner. But equity is a fluid concept. It can be specified only in relation to that mysterious shifting quantity called the “fair market value”.

The owner has dreams about equity of such and such – usually an optimistically high number. But the truth of the matter is that market forces determine his equity by determining how much his property is really worth at any moment in time. The members of the market club - you and I – gang up on the poor old seller and say collectively, “You have a nice little place, but we’ve taken a vote around town, and the best we could come up with is a price of such and such.” At that moment in time, the seller’s equity is defined, and the problem becomes how to transfer to him value equal to the equity involved.

The majority of sellers, of course, will want to hold out for a selling price at the high end of the scale. They want their equity to be overweight. No one can blame them for that but among the army of sellers in the marketplace at any given time, there are always a few – perhaps five percent or less – who say to themselves, “We like our equity and want to preserve it and derive benefit from it, but we are very anxious to sell. So anxious in fact, that we might give up some of the equity in order to get rid of the property quickly.” Alternately, these don’t-want sellers might be thinking – I don’t really feel like