Real Estate Purchase Contract With Gift Of Equity: Fill & Download for Free

I am definitely on the lower end of the wealth spectrum, but the story is not too bad. I hold about $2.2MM CADFrom the time I was 18-19 (2000), I started to get interested in the stock market and made a few trades. I quickly lost everything during the dot com crash and was basically in debt for $10K. I didn't do any due diligence and knew very little about the markets, so I spent the next 4-5 years studying it on my free time. I finished college and started working. I slowly saved for a down-payment, enjoyed my early and mid 20's, and in 2007 started investing again. I had gains, around $50K in 2010, but used all of it and my savings after a child resulted from a short term relationship. The court process lasted for a couple years, but was able to secure custody/guardianship and became a single dad. From that time on, I had basically been living pay check to pay check until recently. A rough 5 years, but highlighted with memories and time spent with my child.Before I needed to use my holdings and savings for my child, I had invested $5K in a high risk venture and purchased a small condo to live in. I did the research on the investment and to me the fundamentals of this investment were great. A couple years later, nothing had really changed because of constant delays with policies and US politics in the sector. I was at a low point, very little net worth considering my age and facing the reality of having to 'start out' again from virtually nothing. I had to reduce work for child care and had more expenses, was not able to save anything to invest. I had all but written off my prior investment, but interest slowly started happening. The fundamentals were still very good and I thought to myself that this is my only chance to make some real money, but I had none. I knew the investment well, so I decided to go all in and scrape up whatever I could get my hands on.I took some big risks to raise capital, sold my home for the smaller amount of equity I had put down. A home equity loan was not possible because they are capped off at 80% of the home's value in Canada. I resigned from work, after being there 10 years, so I could access pension and pay outs. After selling and resigning, I moved to a small basement suite, which I still live in, and started a new job that fits my parenting schedule well. I am still currently working at the moment, part-time 25hrs/week. Up until recently, I was working full time.After making my 'all in' investment, I sold whatever I had of value and any extra funds leftover and invested more until 2016. Although I and others knew the value of the investment, it took another 3 years before larger companies took notice. The changing of The President of the United States to Trump played a major role as the main holding of the investment was located in the US. All said and done, the company was bought out for low 9 figures.Because this investment took so many twist and turns over the 8 years to materialize, I had lots of time to think about what to do with the earnings. $1.1MM, or half of it, is in a LRSP (Locked-in RSP), which is inaccessible until 55 by law. I can invest it in whatever I like, but cannot access it for another 18/19 years and there are strict limitations for early withdrawal, ie. Terminal Diagnosis. The other half, $1.1MM, grew within my TSFA (Tax Free Savings Account) Brokerage, so not a penny taxed on my gains. Canada Revenue Agency inquired, but activity showed that I used my TFSA for ‘investments' rather than ‘trading' because of the infrequent activity from 2010.I plan to finish a contract I have at work and resign by the summer. I want to relax and travel a little over the summer, my last vacation was over 6 years ago. I also want to take my child to Disneyland in September. I have no immediate plans for the money other than keeping it parked in ‘safe’ holdings and wait for the stock market to go upside down. I don't trust the markets, there seems to be a lot of irrational exuberance this past year especially. I feel 2019 will have a lot of undervalued stocks after a 1 year+ downtrend. My investment strategy would be to purchase a lot of devalued stocks during the upcoming market downturn and ride the wave back up.I live in a part of Canada where the average detached home is around $1MM. I am in the process of exploring a strategy of unlocking my LRSP and using it in real estate for me to live in. After relaxing, traveling, and enjoying the summer I plan to get a newer car and start thinking of moving/buying a home. The real estate market is going down in Canada and will plan my move once I got all my ducks in a row and a good entry point/home is found. I don't plan on moving for some time after so I am not worried about price fluctuations in the short term. My simple lifestyle, combined with a good investment strategy, would likely mean that I could live modestly with current holdings even with a real estate purchase.I grew up with very little means, especially when I was younger, my parents struggled hard in the 80's and early 90's. We lived in social housing, but the school district and catchment we lived had some nice neighbourhoods with good schools and funding. That provided me with a above average public school education that I feel payed dividends later on. From elementary school I worked to pay for things I wanted, newspaper routes, assembling electronic components through my mom's work, high school summers working in landscaping/construction/carpentry, and a after school bakery job during highschool. I paid my own way and worked through college and saved to buy my first car. My parents know of my (now former) financial struggles and helped out on a few occasions when I asked, but they and my brother have no idea of the ending. They think I lost a lot of money on the stock market because of the dot com bust fail, exposure to the 2008 financial crisis, and previous stagnant status of my last investment. I will give some money to my brother and his family and take them and my parents for a family vacation when the time is right. I don't know how I will tell them, as money is something we don't talk about often and they think I sold my home to pay for bills and changed work to be home more often. They may be a little disappointed in my reckless behavior, taking huge risks considering my situation, but "When it feels scary to jump, that is exactly when you jump, otherwise you end up staying in the same place your whole life, and that I can't do." - Abel Morales, A Most Violent Year (2014). My child is a little too young to fully grasp the situation and knows that we will be going to Disneyland before the end of year and got a few gifts.I'm sure my family will be surprised and happy for me. My goal is to get by with as little to no stress and financial obligations, living modestly within my means, and investing wisely/safely so I can make this opportunity last my lifetime

How do you invest in real estate for free?Your question is unclear. Do you mean:How do you invest without paying for anything other than the property itself? OrHow do you invest without paying anything at all?Further:How are you defining “invest”?Let’s start with a few basics, so we can figure out ways to work around them: When you’re buying real estate, your largest costs often are the down payment and closing costs.To eliminate your having to pay a down payment, you’ve got two options:Find a transaction that doesn’t require a down payment, orHave someone else pay it.There are some lending programs—the VA 100% financing program is the best known—that don’t require a down payment. FHA loans only require 3.5% down, but you can’t use those for investment properties. Some folks, however, like the idea of “house hacking”—buying a house to live in but renting out a portion while living in the rest, or buying a duplex, living in one and renting the other out.Or have someone else pay it. You can be given a gift—a chunk of money with no requirement to repay—and use that. Usually the giver is a parent. But there are limits to how much can be given without incurring tax consequences. Another possibility is equity sharing. Someone else—a relative, an investor, it doesn’t much matter—puts up the money in return for partial ownership in the property. When the property is sold, the “money” person gets his/her money back with generous interest and also often with a percentage of the profits.Or you could find a deal—like some investors do—that doesn’t require a down payment or other fees and closing costs. You could acquire a property “Subject To”—that is, subject to the existing mortgage. Usually the seller is highly motivated and in a time crunch. The seller deeds the property to you and you agree to make his/her mortgage payments. At some point in the future, you either sell the property or refinance it into your own name. Usually, you’ll have to come up with some money, if only because the seller is behind on payments and you’d like the payments to be brought current. (Otherwise, the bank will foreclose on the seller and you’ll lose your house.) Here, too, though, if you need some cash, you can get it as a gift or a loan. It really doesn’t matter.Define “Invest”We’ve assumed that you meant that you buy a house, probably rent it out, and probably one day sell it. But there are plenty of ways to control real estate without buying it. Technically, some would argue that these methods aren’t really investing. And they may be right. Still, you’re making some nice money by being involved in real estate transactions.One method is “wholesaling.” In some parts of the country, the same basic process is done with options (rather than purchase and sales agreements). But here’s how it works: You find a property that you can put under contract for a low amount. Usually (but not always) the property needs a lot of work. You then find a buyer—usually a rehabber though sometimes an end buyer—willing to pay more for it. Then you assign—sell—the contract. You don’t buy and sell the house. You just sell the contract.Here’s a quick example: You find a house that, in fixed-up condition, would sell for $350,000. It needs $80,000 in repairs. You put it under contract for $150,000. You know that a rehabber would pay $165,000 for the deal. So you offer it for $165,000 and a rehabber does want it. At closing, you assign the contract to the rehabber for $15,000. The rehabber then buys the house for $150,000.Follow the money.The seller gets his $150,000 from the purchase by the rehabber. The rehabber pays a total of $165,000 for the deal. And you make $15,000. A few quick points: You will have to put up an earnest money deposit. That’s often $100, but your assignment contract with the rehabber is written so you get that $100 back at closing. So the deal itself costs you nothing . . . although you’ll undoubtedly have some marketing costs to find the deal.You can do that with an option as well. You’d option the property for $150,000, then sell the option to a rehabber for $15,000.So those are a few ways to invest in real estate—or to engage in profitable real estate transactions—using none of your money. Or, as you put it, “for free.”

Can you really buy a home with no money down like we are told by these real estate gurus?Yes.It’s not (usually) easy. You have to know what you’re doing. And it’s definitely not as simple as the gurus make it seem. But, yes: You can really buy a home with no money down.As a side note: I’m amused by the folks who simply say “no” or “It’s a scam.” All that means is that they don’t know how.Let’s divide the question into two parts:Can you buy a home with no money down?Can you buy a home with none of your own money down?Buy a house with no money downThere are the well-known VA (Veteran’s Administration) and USDA loans. Some states also have down payment assistance programs—often for narrowly-defined populations and sometimes applicable to specific geographic areas. But these aren’t the programs being sold by the late-night gurus.The actual guru strategies vary, depending on both the guru and what’s working at any particular time. But here are some techniques:Subject To: This is one of the classics. You have to understand that there’s a difference between the note and mortgage—essentially the IOU to the bank—and ownership. When you buy a house, typically you get ownership (the deed) and you also become responsible for paying off the mortgage. But ownership and indebtedness are two separate subjects. In a Subject To, the seller transfers ownership to you, but the seller is still responsible for the mortgage. (“Subject To” means that you’re acquiring ownership subject to the existing mortgage.) A seller who’ll consider a Subject To likely is on the verge of falling behind on payments (or may already be behind). You explain that you’ll make up late payments and continue paying the mortgage . . . so that the seller’s credit isn’t injured. At some point, you’ll either sell the property or refinance it into your own name. If the seller is behind on payments, you should make up the late payments, so that’s money out of pocket, but it isn’t a down payment.Lease-Option: You negotiate a lease with a seller, with part of your rent being credited to the down payment. Disclosure: I’ve done lease-options with no up-front option fee. (If there is a payment, it’s an option fee—purchasing an option on the property—not a down payment. Still, as I said, I’ve done them with no money out of pocket. There are plenty of reasons why a seller might accept a lease-option offer. Often, the seller can get “full price” for the property. Sometimes there are tax reasons why the owner doesn’t want to sell now, but wants to sell eventually. Sometimes the seller has had difficulty selling the property. A lease-option can be a win-win situation. Especially for the buyer, though, he/she has the right but not the obligation to buy.Lease-Purchase: Similar to a lease-option, but here the buyer is obligated to purchase. Often there is a down payment, but there doesn’t have to be. It can be set up like a lease-option, with a portion of the rent being credited to the down payment. Similar to lease-purchases (and it often depends on where in the country the technique is used) are land contracts or contracts for deed.Seller Financing: You find someone who wants to sell a house. They don’t need (and often don’t want) the full payment up front. Instead, they’re willing to act as the bank. Every month, you make a payment to the seller, rather than to a bank. Usually, the seller will initially ask for a down payment. That’s negotiable, and some sellers will forego a down payment, often in return for some other terms or conditions. With seller financing, as with the other techniques here, it’s advisable to have a lawyer set things up for you, for your protection.Buy a house with none of your own money down.Borrow the Money: Borrow the money from a relative, friend, private lender, or (if it’s an investment property) a hard money lender. Use any of the techniques above. If some sort of down payment is required, you borrow the money. A lot of the gurus out there make much of their money by lending money, either short-term or long-term, to their newbie students. They evaluate the deals, basically using the students to find the deals for them. If the deal works, they’ll lend the money, sometimes not only for the points or interest but also for a share of the profits. Disclosure: My wife and I bought our first house with the down payment coming as a gift from a relative. Yes, it is possible.Equity Share: This is a variation of borrowing the money. In this case, however, it’s not just that the money is borrowed—with the loan usually being secured by the real estate—but that the lender takes an actual ownership interest in the property. Up-front paperwork specifies the percent of ownership and the process to be followed when the property is sold. Often the lender is a “silent” partner with the borrower responsible for maintaining and managing the property.Bonus TechniqueWholesaling: Put a property under contract and then assign/sell the contract. In true wholesaling, the wholesaler—the investor—seldom actually buys the property. Quick example: Find a house that, fixed up, will sell for $350,000, but it needs $80,000 in rehab. Put it under contract for $150,000. Find a rehabber willing to pay $165,000 for the house. At closing, you assign the contract to the rehabber for $15,000; the rehabber then buys the house for $150,000. Rehabber’s outlay: $165,000. Your profit: $15,000. And the seller gets his $150,000. Often, the $150,000 contract is secured by a $100 earnest money deposit that the wholesaler—if the assignment contract is written properly—gets back at closing. So the wholesaler has put nothing down on the deal and makes $15,000, generally in 2–4 weeks.Sometimes for a variety of reasons the wholesaler has to buy the property, and then resells it in 3–48 hours. In that case, there are a variety of closing costs plus the cost of borrowing the purchase price for 24–48 hours. That’s usually 1.5%-2.0% of the purchase price. That comes from what’s called a “transactional lender” who is providing “transactional funding.” So, if the wholesaler actually has to buy the property, there are all sorts of expenses involved and his/her profit is less. Still, in keeping with the question as posed, it’s a way to buy a house with no money down.Disclosure/Disclaimer: I’ve done a number of wholesaling deals similar to the one described above. Yes, it is possible. I also know several very successful investors who got their starts by buying the programs sold by the late-night gurus.