Technique No. 45 You Put Up the Cash; I Put Up the Time and Expertise

This is the most common partnership arrangement: In exchange for cash needed at the front end, and sometimes cash to offset negative cash flows and balloons, the partner receives an equity position in the property.

In a case from our Atlanta file, for example, a beginning investor with only $100 rent money in his pocket was able to close his first deal using $2,000 from a partner. In a recent San Diego case, a father and son team located a partner with the $7,000 needed to get into a condo. Somewhat bigger stakes were played for in a Los Angeles transaction completed by one of our colleagues in the recent past: the buyer lined up several partners to provide the cash needed ($148,000) to close on a 72-unit property. Regardless of the amount invested by partners, the principles are always the same.

10. OPTIONS

This final section treats a group of special creative finance techniques that permit a buyer to gain control of significant amounts of real estate with little down, even though ownership may be many months or years away – if ever. The principle is simple: the person buying the option gives the seller a sum of money in exchange for the right to buy the property at a given price within a defined period of time. The buyer then benefits by locking in the price and gaining control of the property without a large investment. The seller also benefits by retaining the tax advantages of ownership while locking in the sale at an acceptable price or picking up the option money in the event the buyer decides to back out. The Nothing Down System includes five variations of the option.

Technique No. 46 The Rolling Option

In this approach, a large tract of land is optioned piecemeal by the buyer. Rather than taking control of the whole package at once, which would be very expensive, the buyer purchases a segment for development or resale while at the same time buying an option on the next segment. The option can then be rolled from segment to segment until the whole package is developed or the option dropped.

Technique No. 47 Equity for Options