How to Be a Capitalist Without Any Capital: The Four Rules You Must Break To Get Rich

by Nathan Latka

SUMMARY Step 1: Find a great deal. Go to a real estate agent in your market and ask them for direct access to their “Back-end MLS.” They’ll put your email in their system and anytime a new deal comes on the market, you’ll get an email. Step 2: Figure out how much money you can make. Peek at these deals every now and then and compare the selling price to the rental income. The MLS will have rental income listed if it exists. Look for deals where rent makes up at least 1 percent of the total deal value. If the sale price is $200K, you’re looking at a good deal if rents add up to about $2K. Step 3: Finance the deal with no money down. Minimize the cash you need. The largest chunk of cash you pay in a real estate deal is the down payment. If you’re living in the place you’re buying, expect to put 5 percent down. If you’re renting, expect to put down 20 percent. Our next step details how to get out of paying this money down. Step 4: Manage your property without spending time. Find the property management company you want to use to manage your unit after the purchase. Your business is worth about 10 percent of rental income per month. If you make $2K in monthly rent, the property management company will take $200 per month or $2,400 per year. If you intend to hold the property for life, let’s say fifty years, that money starts to add up. Ask your property management company to write you a $4,800 check (two years of property management fees); otherwise tell them you won’t do the ...