The book “Buying Real Estate Without Cash or Credit” by Peter Conti and David Finkel has an intriguing title for either beginner investors or more experienced investors who want to stretch investable funds further. Alas, 3/4 of the book is a blatant advertisement for the author gurus’ bootcamps and sell-up options. So, you need to skim through quite a lot to get to some interesting actionable nuggets.
The book is written in a style that includes many “informal quotes” from novice investors going through the entire bootcamp and coaching process until every one of the investors finds investment success after following the instructions of the gurus. Parts of these instructions are included in the book and provide some good food for thought. However, many topics are addressed by simply stating that the students go off for a day with a paid coach and come back educated, or get invaluable camaraderie and accountability through the mentorship program. The authors set up overly saccharine, “touching” scenarios where the newbies come out on top and make a better world for their kids. The web sites and guru programs are not even still around as represented in the book, since the book was published in 2005 and the gurus have moved on.
So, is any part of the book worthwhile? Yes, actually. But you have to do a lot of wading and filtering to get to those good points.
One interesting viewpoint is contrary to the traditional and clichéd “location location location” mantra. Instead, the authors say that for investors the Winning Deal Formula is 10% Property and Location, 30% Financing (price and terms), and 60% Seller Motivation. For investors looking to make their money on the buy, or those looking to flip or value add, there is a lot of truth to that. The actual 10% Property and Location may be rather simplistic, but it helps make the point of honing down on properties based on them being a “deal” instead of them being in the “right place”.
Along those lines, motivation = a compelling reason + time crunch, and seller situation = lots of equity or doesn’t need to cash out immediately. The authors provide interesting, but half complete, scripts that beginner investors can use to ascertain true levels of seller motivation and situation. There is an emphasis on repetition and learning, dealing with objections, and moving on quickly instead of wasting time on non-motivated sellers.
Ways to market and increase deal flow are also addressed, including newspaper ads, signs, calling landlords and sellers directly, direct mail, and referral networks.
Then the book finally gets to the topic of its title. Multiple avenues are addressed at a high level: seller financing with low down payments, purchasing subject to the seller’s existing financing, leasing from the owner with a purchase option and then doing the same to another buyer with higher lease rate and higher sale price (making a profit on the spread), and creative financing terms. Other options such as private money, using your own credit, working with hard money lenders, and getting an equity money partner are included, too. Exit strategies are also briefly covered, to round out the discussion.
The authors then go back to negotiation, NPL (neuro-linguistic programming) techniques, and ways to steer a reticent seller to provide a good deal to you as an investor. These sections are perhaps the most useful information in the book, though they would take some practice and do not work well on all strong willed sellers. Nonetheless, there are some nuggets to take away and modify for your own personal style.
The book wraps up with goal setting, action plans, and supposedly true stories from various aggregated characters that have stories told to inspire.
As an experienced investor, it is always beneficial to learn negotiating approaches, how to deal with different types of people, and creative leverage/financing techniques. Those sections of the book were interesting and there were tidbit takeaways here and there that can be useful. However, the cheesy selling of the authors’ own paid programs was constant and glaring. As such, the book is only recommended to those who are good at skimming.