Show notes
In this episode of Invest In You Podcast, Fredrik is on a road trip from the UK to several different countries: France, Belgium, Netherlands, Germany, Denmark, and Sweden. While he is travelling, he talks about the Holy Grail of Investments, No Money Down. How can you invest money with none of your own money? People would really love to know this very trending topic. You will need to work with other people’s money.
Fredrik talks about all the ideas that he has come up with about No Money Down. He talks about it in details explaining each one of them with great knowledge based on his experiences and the books he’s read.
KEY TAKEAWAYS
- 2 concepts that have been discussed over and over
o No money down
o Other people’s money
- If you don't put any money into a deal, there is no deal usually. There is always some kind of transaction of funds. One way or another. And it can be everything from 1 pound upwards. It can also mean that there might be a substantial amount of money which will change hands but it might not be yours.
- Five F Formula
o Find. Find the actual whatever you going to purchase and acquire. That also clears, of course, to analyze the deal if make sense or not. It also involves how to negotiate it.
o How to fund. Funding. How to come up with a funding solution for whatever you intend to acquire. That can be debt. It can be equity. It can be working with cash. It can be a loan, a mortgage. It can maybe sum in different ways. It can also be done with a broad range of interests and layers of finance of different categories in terms of risk. And often, high risk usually means that they need to pay more for you.
o To fix whatever it is. The fix stage is if you are working in property, real estate, it is all around, for example, to do a renovation, a restoration, a refurbishment, you might as well add value using skills such as planning, uplift, you might extend. The property upwards to the rear, to the sides, or downwards. You might also move around the interior design to be a better purposely done for what you intend to use the property for. If you relate fixing to a business, that can be everything to doing cost savings, changes in the staff structure. It can often be linked to becoming better at debt collection. It can also mean that you improve the cash flow so your fostered collection and you negotiate better terms so that you can pay later.
o Flip. So that is a trading profit or it can also be that if you would like to maintain it. It around filling it. And if it is a business, is filling it with more purpose energy. The right direction. If it is in property, it is filling with the right kind of tenants to ensure that you also got a right structure in place. Which hopefully means using as little time as possible from yourself.
o Flourish. Flourish is using your own knowledge or your partner's knowledge or coming up with really creative ways how to add a substantial amount of value. For example, seeing things that other people can't see. Having an extraordinary level of financial IQ or be really business savvy. It can also be having unique skills and talents that add to the deal in one way or another.
o Bonus. Why would they ever like to give you any money at all? You don't look like a bank. You don't appear like a bank or do you? There are many aspects of how to do this. So if you take the best from what we can see in the financial sector, what is good and common practice and you apply that. Things to consider are why would people like to do business with you? You would like to build trust. Trust is so important in this case. Beyond having that level of trust, you need to know what you can offer in any kind of negotiation.
- Best advice: If you would like to do something and you would like to save yourself both time and headache, find the best person who's doing what you would like to do and do it with them.
- Build Credibility online. Social aspects of things to link to your personal brand. Example, in Social Media platforms like Google, LinkedIn, YouTube, etc. Take control of the first page. Google your company. Just be aware of your social footprint.
- SPV - Special Property Vehicle.
- How we are as potential borrowers ensure that we can get the money out of the deal? Example, use an investor to repay another investor.
- Buying things below market value. Buy something at a discount, even a 25% discount.
- Get much higher value for the money. How to do this? It is a magic trick. You need to dare to ask other people for the money. No rocket science.
- Ten ideas linked to how to buy a property using none of your money:
o Use someone else's money. You borrow money from someone even the equity part.
o Another way to do it is to do a so-called lease option with a purchase.
o Take over an existing mortgage. Particularly useful if they got a low-interest rate.
o Take a property and exchange it for another one. Swapping it.
o Offer your time, skills, and knowledge to get a property.
o Vendor finance. Get the seller to finance this impart. Most sellers put part of the money in the bank.
o Offer a much higher price but that will be paid in a number of instalments.
o Joint venture. A partner who puts in all the money.
o Purchase a property by exchanging them. Exchange maybe at any amount of money. Delayed completion.
o Try to always buy for cash flow.
- Challenges with no money down. You, your head, your mind, and your potentially limiting beliefs of your own capability.
- Advice from Belgium:
o It doesn't take money to make money. It takes courage to make money. You take a risk, a calculated risk. Have the courage to ask for other people's money. Do you have the courage to dare to work another with other people's money so that you can do a no money down deal?
o It is all linked to money. The money is increasing value. Countries are printing money. Who has got my money? Think hard. Would you like to have some of the profits? Come with a sale of a plate. Get a list of people that you want to offer that profit opportunity. Happy customers will come back to you. You can be oversubscribed when it comes to your deals.
o You need to be aware of what is legal and what is not legal. Just be aware of the local rules.
o If you are looking for other's people's money, then really what you need more than anything is to understand this is a matter of selling, influencing, helping and supporting. You have to have an activity or there will be nothing
- One reason why no money down deals are so exciting is that it forces you to be more creative, more solutions driven, inviting you to search problems, and usually the bigger the problem, the bigger the pay. The bigger the problem, the lesser the competition.
- Control. Influence. Accept.
- You don't have to do everything yourself. Who else do I need to engage to find the best solution for this? What can we do to bring this to the best possible solution?
- Due diligence. You are very much responsible for doing the analyzes on the deal which is at hand as part of finding something. Highly recommended that you and the potential investor are doing the due diligence on each other.
- Find out the real motivator.
- No money left in the deal. Time and money and speed of money that you can use and recycle the money at a higher pace, that's really really key. You can use the money over and over.
- Timing is essential. To match the deal and the money flow are equally important. It needs to happen at the right time or it might be lost.
- How we can customize the message so it is best understood? Treat other people the way they like to be treated. That is the golden standard of communication.
- Values. Foundations underlying. Values very much drive the habit and the behaviours. How to work with someone else? What do other people value most? Understanding what their life is all about.
- It is really cheap money to refinance money from your home to use for investments. Also, if you have got a business, you can also get a business loan.
- Two core components are security and commitment.
BEST MOMENTS
- “So I have the philosophy not to be too highly geared or leveraged which means I got a number of my different investments, mortgages, and loans on some kind of repayment structure.”
- “Trust is always been almost like a currency that you can trade with.”
- “There is no such thing as no money down. The money has to come from somewhere.”
- “Many people don't get to work with other people's money because they don't dare to ask. What is the worst that can happen? You can get a no. A no is not that bad after all.”
- “What really kills any business is the lack of cash. It might have a super asset rich business but if it doesn't have enough money to pay the staff, the people that you owe money, and then all of a sudden the whole business can be felled in a very fast way. The creditor can be really tough and start legal actions very fast.”
- “It is around the mindset. If you believe you can, if you believe you can't, either way, you're right. So if you believe you will find a way to find money, guess what, you will.”
- “If you don't ask for the money, have the right network or connections to position your proposal, guess what, you will never find the money.”
- “Don't jump into bed just because you need the money.”
- Every deal is unique.
ABOUT THE HOSTS
Serial entrepreneurs Fredrik, Charlie and Ivan Sandvall love sharing ideas and interviewing world-class entrepreneurs and influencers. Invest in You is about investments, entrepreneurship personal development and doing fun things. They hope to inspire you to take action, helping others and yourself plus enjoying the journey we call life.
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Fredrik Sandvall
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