Erie Real Estate Investing & Real Estate Financial Planning™ Podcast · James Orr

Secrets to Low and Nothing Down Strategies

·1 hr 13 min·4 clips

Private money is borrowing from grandma, mom, dad, or friends, not a business lender.

James Orr starts by framing low and nothing down strategies as a common question from investors who do not have much cash sitting around. The real issue, he says, is often not the property itself but the down payment and the reserves. He walks through the basic idea of using someone else’s money for the equity piece. That can mean a private lender, or it can mean a partner who has the money and wants a return. He then slows down and makes the main point: the loan program matters a lot. Conventional, FHA, VA, and USDA loans are not equally friendly to borrowed down payment funds. Some of them prohibit it outright. The owner occupant versions people use for house hacking are not the same as the investor loans, and the rules are different. He also points out that portfolio lenders usually want to see you bring the money yourself. So if you borrow the down payment, do not assume every lender will be fine with it. The workaround he spends time on is structure. If the money sits inside an LLC and the deal is set up as a partnership instead of a simple personal loan, the transaction can look very different. He gives the example of someone contributing a large chunk, like $100,000, to cover the down payment, some holding costs, and some reserves. In return, that person might earn the first 5%, 7%, or 10% on the money made inside the LLC. The point is to document who is putting in capital and how that capital gets paid back. He keeps circling back to the same practical warning: what is acceptable in one loan program may be a problem in another. That means the investor has to think like both a borrower and a lender before signing anything. The episode closes with the show's broader Erie investing frame and a sponsor reminder that cash flow is tighter now that prices and rates are up, even as rents have risen too.

As heard by us

A clear look at low- and nothing-down investing, with the main loan paths and their limits laid out plainly.

The episode looks at low- and nothing-down real estate investing with a clear focus on what happens when savings are thin. James Orr walks through what lenders tend to allow and makes a plain comparison of conventional, FHA, VA, USDA, and portfolio loans, especially around when…

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Why you'd press play

You need a workable route into a deal before the down payment is fully there, especially if your resources are limited.

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