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How Marketplace Homes Came to Control $300 Million in Real Estate With No Bank Loans

Posted by Will Dickson on Wednesday, June 22nd, 2016 at 3:37pm.

Tuesday, 21 June 2016 11:11  (EST)
At the pinnacle of the housing market crash, I was the guy bankers loved to tell “no.” I’d walk into an investment firm, tell the first person I saw, “Hey, we should buy real estate,” and right on cue, a door would slam in my face. I’m pretty sure everyone thought I was off my rocker. Why on earth was I — some random guy off the street — waltzing into financial institutions and proposing illogical investments in an industry that was in the midst of crashing through the floor? I’ll admit, I probably looked pretty crazy at the time. But in retrospect, I’m really glad banks forced me to assemble $300 million in real estate with no bank debt.

Marketplace Homes Takes Matters Into their Own Hands

My failed attempts at making a traditional investment in real estate — one with loans or boatloads of cash involved — opened my eyes to alternate avenues that are just as lucrative, and carry less risk. I took matters into my own hands and spoke directly with homeowners themselves. These folks — who were getting hosed on their own investments — were much more receptive to my offers. Fast-forward to today, and I find myself in control of more than 2,000 properties spread out across the country. Notice that I say “in control of” and not “in ownership of:” You don’t necessarily have to buy property in order to invest in it; you just need a controlling interest in it. This is a key detail — one I’ve built a successful business around. My 2,000-property portfolio is worth about $300 million, and yes, it’s highly liquid. But I still see lots of equity, and now that the market has begun to rebound, people are lining up at my door to take these houses off my hands for good. Here are the three main techniques that allowed me to build a $300 million real estate portfolio without spending a dime or taking out a single loan:
  1. Marketplace Homes Reviews Lease-to-Own - In this scenario, I would sign lease contracts with homeowners, guarantee the rent on their homes, and include an option to buy down the road at a price that generously exceeded the home’s current market value. I was doing this between 2007 and 2015 and was offering a purchase price that was about 15% above current market. Also, in this agreement, the homeowners would still maintain the property tax write-offs and savings.I probably drew up more than 5,000 of these agreements, and they helped me create a portfolio that brought in positive cash flow from day one without any out-of-pocket expenses. Many have since been sold.
  2. Marketplace Homes Reviews Land Contracts - A second way I went about building my portfolio was through land contracts, an option that required the homeowners to own their homes outright. We’d sign a contract that guaranteed them a fair market price and required no out-of-pocket money from me. Then, from that day forward, they’d essentially serve as the bank. It was between the seller and me to agree upon an interest rate — usually, it ended up around six to nine percent.Not a whole lot of people own their homes outright, so you won’t find very many opportunities to capitalize on this option. But if you do find someone who qualifies for a land contract, don’t hesitate to pounce! The owner gets a great rate on money and doesn’t ever have to put funds into the home.
  3. Marketplace Homes Reviews “Subject to” Deals - The third technique I used to build my real estate portfolio was entering “subject to” deals. Instead of a traditional sale, in which the seller’s mortgage would be paid off at closing, this method would simply transfer the responsibility of the mortgage to my name. I was immediately responsible for everything: monthly payments, taxes, repairs, and upkeep — but, like these other options, it required no money down on my behalf. In addition, the owner still has a mortgage in his name.
If you play your cards right, you can inherit a great situation that results in a nice payday once you decide to flip the house or rent it out. Don’t be afraid to think outside the box when investing in real estate. Taking the traditional route of ownership led only to doors getting slammed in my face, but focusing on controlling properties opened up an opportunity that became more valuable than I ever imagined. Don’t let slammed doors be your final answer. Be willing to pry open others to find your own path to investment success.
Written by  Mike Kalis

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