Is it REALLY possible to buy real estate with no money down? How was bestselling author, Robert G. Allen, able to make that happen?
With his nearly 50 years of real estate experience, Chris Miles finds out from Robert to find out what he sees as the best real estate opportunities in the current market. Listen in to find out what he said!
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No Money Down Real Estate With Robert Allen
Thank you so much for reading. You have been binging on these episodes and applying these things, which is exactly why we do this show. Thank you for allowing me to create a ripple effect for you. As a reminder, if you haven’t done so already, go to our website, MoneyRipples.com. Use the Passive Income Calculator to find out how much passive income you could create in the next twelve months using the cash that you already have. Maybe cash you didn’t know you had that could be used to work for you, so you have to work so hard for it. Go check that out.
I’m bringing on somebody that I’m very excited to have on. Have you ever heard of Robert G. Allen? He’s the number one best-selling author of many books. You might have heard of Nothing Down 90s. He got us fame and his glory. Many of you have been doing active real estate investing. Robert is holding up his book, Nothing Down for the 2000s. If you have been in real estate, you’ve probably heard of Robert and used it too.
He’s even got other books like Creating Wealth and Multiple Streams of Income. One I read before I made it as a financial advisor is The One Minute Millionaire with Mark Victor Hansen. That was another great book that I read before I left, went to the light side, and stayed with the dark side with all those other financial advisors. I’m excited to have Robert on. Robert, thanks for joining our show.
I’m so happy to be here. Let’s ripple.
I keep forgetting. You’re in my backyard in Utah, aren’t you?
I live in the South of Salt Lake City.
Same here. I’m glad to have you on. I was going to say two Utards here, but I shouldn’t say that. That’s demeaning for those of us living in Utah. It’s good to have you on here.
Thank you. I’m looking forward to shedding some light on the subject and helping people who read this regularly and learn so much from it. I hope this will be valuable to them.
Give us a little bit more of the backstory, especially for those who maybe haven’t heard of your fame or maybe haven’t read all your books, but they should. There’s got to be a few.
Nothing Down came out in the 1980s, so that was 43 years ago. It’s been a while. It is the all-time best-selling real estate investment book and a number one New York Times bestseller. It came out of my experience of making my first million investing in real estate. I was not having much. I started with $1,000 and then parlayed that into the next deal.
I’ve seen lots of cycles. Most people think this is the first time it’s ever happened, but I got started in the recession of 1974. That was 50 years ago, and there was a huge recession. Some of you are not even born at that time or have forgotten about what that was like. Nobody was buying real estate. I had an MBA at BYU, but I couldn’t find a job. I said, “The heck with it. I’m going to take the $1,000 my dad gave me for graduation and buy a piece of real estate with it. How hard can it be?”
I have no clue how much you needed and what are the qualifications to get loans or any of that stuff. I found a millionaire who was in my local church group, and I said to him, “Paul, I’ve got $1,000. You’re a multi-millionaire. Show me how to do it.” It wasn’t that easy either, but the bottom line was, and to make a long story short, I bought my first property with that $1,000. I flipped it immediately. We didn’t call it flipping back then but I flipped it. Within a month or so, I bought a seven-unit building and flipped that. I bought a 12-unit building, a 10-unit building, a 40-unit building, on and on, lots of single-family homes, and then became a millionaire.
In about 3 to 4 years after graduation, when I couldn’t find a job, I wrote the book, Nothing Down, which has helped thousands of people. It’s amazing. I bump into people all over the place who are like, “That was the book that got me started. I now own 3,000 apartment units. Thank you, Robert.” That’s me. I wrote Creating Wealth, which is also a number one New York Times bestseller. Multiple Streams of Income shows an entrepreneur needs to make money and all kinds of ways, not just real estate. The One Minute Millionaire is probably my four million-copy bestseller that has reached probably the most amount of people.
People challenge you on the whole Nothing Down concept. I remember it was somebody in the media who challenged you to do that. Can you tell us more about that story?
I was asked by my publisher for an advertisement that they wanted to run in the Wall Street Journal, and they showed me the ad. I was a young buck, in my early 30s. I don’t know about any of that stuff, but it sounded like a terrible ad. He said, “What ad would you run?” I said, “We’ve got to prove that this works. Send me to any city, take away my wallet, and give me $100. In 72 hours, I’ll buy an excellent piece of real estate using none of that money.”
It sounded pretty good, and he goes, “Could you do that?” I go, “I had never done it. I thought it was possible.” We ran that ad, and it made the bestseller list that was huge for driving traffic, buying the books, and doing my seminars with that same ad. The LA Times saw a full-page ad I bought for my seminar in Los Angeles, and they called me. They said, We don’t think you can do that. We don’t like you running ads like that in our newspaper. We challenge you. We’ll drop you in a city and take you there. Meet us at the airport at the Marriott Hotel at 6:00 in the morning on January 11. We’ll see whether or not you can follow us.”
I showed up. I flew to San Francisco. They gave me five $20 bills. I went into the city and started using my system. The system is based on mindset technique and people skills. How do you create trust with somebody? Do they trust what you’re saying? Are you lying? Are you trying to take advantage of them? My mentor, Steven Covey, taught me the win-win philosophy. If you want to win, you have to make sure they win or it’ll be win-lose. If it’s win-lose, then it’ll eventually be lose-lose.If you want to win, you have to make sure they win or it will be win-lose. And if it's win-lose, then it will eventually be lose-lose. Click To Tweet
You’ve got to be a win-win. You’ve got to be honest, ethical, enlightened, helpful, friendly, and all that stuff. That’s the first skill, which is a people skill. The mindset skill is I knew I’d be suffering maybe 100 or 200 rejections in those three days. I would talk to lots of people. I made lots of phone calls. I talked to lots of realtors. We didn’t have email back then, so the bottom line is in the phonebook.
I did. I got the newspaper when we ran a lot of ads back in those days. I went to a pay phone, cashed my $100 in, and started calling people on the advertisement and realtors. I was getting shut down everywhere. I showed up at a hotel that night. We had to rent a room. I have to live on $100. I can’t just buy a property so we had to find a property in the least likely area of San Francisco called the Tenderloin District. If you know where that is, you shouldn’t. It was a hotel where too young men could show up at a hotel in San Francisco with no identification.
We wanted to pay cash, no credit card, because that’s all I had. $35 was the nightly rent and I split it with him. $17.50 of my first $100 was gone. It had a telephone so there were lots more calling. 10:12 that night, somebody called me back and said, “I got a property I’ll sell you with nothing down.” It was an ad in the newspaper. He said, “Show up at my office tomorrow at 10:00 and all the contracts will be written up for you. Bring $1 and let’s do it.” It was amazing. He sold me the property.
He wasn’t highly motivated or desperate. He was a very smart investor who had bought this property substantially below the market, fixed it up, and then refinanced all of his money back out. He had no money invested in this property and even a little profit he pulled out from the brand new loan. Therefore, there is nothing but his $33,000 in equity that was left. He said, “I’ll sell you this property with no money down. You’ll assume the loan because I made arrangements for the bank to allow one person to assume the loan without worrying about all the cases.”
It’s almost like it was orchestrated. It was a perfect deal. I said, “I’ll give you a $33,000 second mortgage.” He said, “No, you won’t. You’ll give me a $21,000 second mortgage, a $6,000 third mortgage, and a $6,000 fourth mortgage.” That very day, I learned a technique I had never known before. I wrote the book Nothing Down. It sold hundreds of thousands of copies by this time and I didn’t even know this technique existed. He goes, “I’m going to sell the second at a discount to a friend of mine who wants to make a high return on his money. I want the $15,000 in cash I get at the discount.”
He turned my note into a $15,000 discounted cash chunk for him. I got in with nothing. He got out with $15,000 cash plus all his money back from the fix-up. He had $6,000 third that he gave to a builder that helped him fix it up, and he kept $6,000 fourth for himself. It was 3 years balloon, 10% interest only, and 3 years payoff. I get in with zero down. Do I keep it? Of course not. I don’t want to keep it. I want to sell it as fast as I can sell it to somebody else who wants to live in that property. I turn all the balloons over to them and let them pay the $21,000, $6,000, and $6,000, which they did because they got in with nothing down themselves.
They were ecstatic to be able to buy a property like this with nothing down. I didn’t make any profit on this but I made $10 million in profit from the PR that was generated from that. Can you imagine being on the front page of the financial section of the LA Times? Buy a home without cash. Boastful investor accepts the Times challenge and wins.
I bought 7 properties but LA Times only reported 6 pictures of all the properties and the story of how I found them. I was so tired at the end of buying seven properties so I quit. On the third day, I said, “I was done. Here’s $20 back in change. I’m out.” We lived, moved, ate, and bought 6 and 7 properties in 57 hours. That’s one of the reasons that my fame has followed me ever since.
I got to talk about it with you here, 40-plus years later. It works because of the principle of seeking out a highly motivated seller. Most people don’t do this. They quit after 20 or 30 noes. A realtor tells me, “Are you out of your mind? You don’t buy a property with nothing down.” That means they wouldn’t get a commission so they’re going to say that.
The bottom line is you look for a highly motivated seller. Sometimes it takes you 1 month or 2. In my case, I found 7 of them in 3 days but it was an interesting market time. Today, it is starting to move into a very similar time frame. Interest rates are going up. Highly motivated sellers are coming out of the woodwork. Before, it was the buyer’s market. People were hitting the prices up and the person with the biggest amount of cash bought it. Now, that’s not the case. It’ll get worse before it gets better. That’s me.
That’s a fascinating story. It feels like we’re moving into similar cycles, getting creative with real estate versus the typical transactional real estate that most people are used to. You could be an idiot and still make money in real estate for the last several years. Now, it’s getting to the point where sometimes there’s a little bit of creativity allowed here. Is that what you’re seeing as well based on your 50 years of experience almost?
This is creative finance time. Where were they during the run-up to the 1980s or that recession? That was creative finance time. These people had a hard time selling. Therefore, they’re willing to accept creative offers rather than all cash, strong buyers, which is what has been for the last ten years. There were a lot of highly motivated sellers in 2008, 2009, 2010, 2011, and 2012. You could buy properties as much as you wanted. You buy 100 properties. I know people who did and people who lost 100 properties during that time.
You look for highly motivated sellers. With the hot market and all this COVID money chasing all the real estate deals, people were moving out of cities. They needed new properties and a new home because they were going to work from home. They didn’t need an apartment. They wanted real estate. There’s too much money chasing too few real estate deals with the prices going to spike, but they have leveled off. That’s good for us.
The best thing about real estate and the worst thing about real estate is the same, and it is liquidity. If you need liquidity, you need to sell, and you need cash. You have to wait until an offer comes along. Therefore, it’s illiquid for you. You can’t sell it. Like a stock market, you push the button and it’s sold. You got your money in your bank account within seconds. Real estate is different. You put it on the market and wait for an offer. The buyer falls out. You got 1 month, 2 months, or 3 months. In the meantime, your money problem has gotten worse.The best thing about real estate and the worst thing about real estate is exactly the same: liquidity. Click To Tweet
You’ve gotten more flexible to finally go, “I’m out. Take me out of this thing.” They go, “Give me my price, and I’ll give you your terms.” You’re like, “The term is nothing down.” They’ll say, “Give me my terms, which is all cash, and I’ll give you the price,” which is 10% or 20% below the market. That’s what we’re looking for and they’re not easy to find.
Right now, all these wholesalers are coming out of the woodwork and wholesaling everywhere. They’re finding and flipping these properties constantly. We got all the big money that’s into the marketplace. All these huge hedge fund people are putting billions of dollars together, and they’re buying whole neighborhoods of houses.
New houses that are being built, like 30 houses built by builders, they’ll buy them all and turn them all into rentals. They go, “That’s the best place to put your money.” Shouldn’t you learn something from that? Shouldn’t you learn that the smartest money on the planet is not doing money into stock? It’s because the stock is so volatile and ridiculous. Any madman in the world can control the stock market with the right bomb in the wrong place. Illiquidity costs with the cost. If something bad happens, the liquidity comes out and people run.
Look what happened to the bank that failed in Silicon Valley. What did our government do? Bail everybody out. What a stupid thing was that. It’s idiotic. They had insurance for $100,000 so they should have put their money in a better place and learned the risk. There’s risk in money. You can lose money. Government should not be writing checks like that. That’s ridiculous. Every one of us is going to pay the price for that. All the debts are going to be added to our national debt. Inflation is going to be with us for a long time. Therefore, every single person pays not only the people in San Francisco but the stupidity of the government. They’re trying to save the economy.
I want to focus on the last question. For those that want to be more passive investors and maybe they’re not actively investing or doing the wholesaling but flipping, what would you recommend for them to watch out for?
Passive investing is great. Your rates of return are not as high. Your risk is a lot lower though and the time is zero. Therefore, you’re willing to get a lower rate of return and let somebody else make maybe the lion’s share of the profit. You’ve got to find somebody who got a good track record. You don’t want to be a beginner out there who’s trying to put together syndication, and that’s the first time they’ve ever done it. Don’t put your money there. They’ll have to learn by borrowing somebody else’s money. Don’t you do that.
There’ll be lots of places to place your passive income into real estate. They got lots of ads on the radio, television, and online advertising for it. Do some searching. Track down the goods. You can point out lots of people that you’ve dealt with in the past that have stellar rates of return, lower risk, and were professionals. You are the one who should tell them where to go.
I highly recommend that if you are too busy at a job that you love, therefore, you want your money to be working for you. Eventually, when you’re not working, and your money is doing all the work, then you need to get into real estate ASAP. There are going to be more deals and more small apartment buildings. There’ll be more syndications that are happening. This is a good time and the perfect time to do it. That’s it.
I tell people a lot of times, “You can hear the word all you want. It’s about being a doer of it.” Many people I see watch sitting on the sidelines, getting ready saying, “Maybe not now. It seems like real estate might be scary. I’m going to wait a while until it’s not scary.”
We want to buy one that’s scary. Let me tell you why. Why should you not be worried about what the future of real estate is? Will we have another 2008? If you’re buying like I’ve recommended to you, you’re going to buy wholesale anyway. You’re going to have some cashflow. You want some cashflow. Frankly, if the property drops in value by half, where are the renters going to go? They have to have a place to rent.
There are always going to be people. There are new babies being born every single day. The economy is growing. It will always grow. There will always be room for real estate. You might have a catastrophic collapse like 2008 but we came out of it and we’re going to come out of it again, frankly. If you buy right and have positive cashflow, you don’t care. If it is increasing in value, you’re thrilled. Thank you very much. If you do what I recommend that you do, you buy 2 properties a year for 10 years, you got 20 properties in 10 years from now.
If you’re doing a passive income-wise, do it that way. If you’re doing active income, you get a better return. Eventually, you have twenty properties that are free and clear. Is that retirement for you? Yes. They’ll probably be renting for $2,000 a month so it’s times 20. You’re into it. You’re netting $30,000. You’re in $250,000 a year on 20 properties. You’re a nontraditional financial advisor. You’re telling them not to do the traditional things because of commissions and everything else. You’re saying, “You got to go where the real money is. This is where the real money is, real estate. This works.”
Other than going to Amazon to buy your books, which is a great thing they can do too, where else would you recommend them to get to know you better and see your stuff?
Go to RobertAllen.com, I have a free book that you can download there that you’ll love. It’s called The Challenge. It is me going to the unemployment line and selecting three people who had no money or job, nothing. They made $5,000 in the first 90 days and $100,000 in the next 12 months. This is the actual story. It’s like a novel. You’ll get to know these people.
The reason why I’m saying that is, why nothing down? Your clientele probably has money, but do you know what they have? They got kids. The kids need to learn how to do it. If the kids come to you and say, “I want the money for this property, Dad, Mom,” give them this book and say, “Go read this book. If these unemployed people can do it, you can do it. If you find a great deal, maybe I’ll come in this partner, but not until you do 1 or 2 by yourself.” That’s what I want to do.
It sounds like a great gift. I appreciate that. That’s awesome. You can go ahead and download The Challenge. That sounds like an amazing story and book. It’s something that you could apply in your life, as well as your family’s life, which would be a great gift to them as well. Check that out. Robert, I appreciate your time. Everybody else, make a wonderful, prosperous week. We’ll see you later.
- Passive Income Calculator
- Nothing Down 90s
- Nothing Down for the 2000s
- Creating Wealth
- Multiple Streams of Income
- The One Minute Millionaire
- The Challenge
About Robert Allen
Robert is the author or co-author of some of the most influential financial books of all time including the New York Times bestsellers Creating Wealth, Nothing Down, Multiple Streams of Income, The One Minute Millionaire, and his latest title, Cash In A Flash.
The National Speakers Association named him “America’s Top Millionaire Maker.” He has made thousands of appearances on television and radio, such as Good Morning America, Regis Philbin and Larry King. He has been the subject in numerous international publications including the Wall Street Journal, The Los Angeles Times, The Washington Post, Newsweek, Barons, Money Magazine and Reader’s Digest to name just a few.
Robert Allen has been teaching ordinary people how to achieve extraordinary success and financial freedom for over 30 years by using Multiple Streams of Income. He is a serial entrepreneur and his focus is marketing ‘how-to’ information.
Robert’s purpose in life is to teach people how to achieve financial success—even starting from nothing. He teaches that the source of true wealth is an internal reservoir of passion, creative thinking, courage, persistence, and giving back.