3% Cash Back
As I said before, when buying real estate you want to keep as much of your own money in your pocket as possible. If you’re getting a bank loan though, the bank is going to require an appraisal, survey, inspection, and various other fees that are known as closing costs. Your closing costs will depend on how much the property is worth and the type of lender you use (a mortgage broker will cost you more than a traditional bank loan). For me, closing costs have been between $2000-$4000. That’s a lot of money out of your pocket, especially if you’re a fledgling investor. So what’s a cash strapped investor supposed to do?
It’s a little known fact that you can receive up to 3% cash back on your loan. Any time I make an offer, it is contingent upon the seller agreeing that 3% of the purchase price will be given back to me in order to pay for closing costs. Even if you have to pay a couple thousand more for the property in order to get the seller to agree to these terms, it is definitely worth it because it’s a couple thousand dollars less you have to pay up front. The less you pay up front, the better I say, because as I said before, the less money you have into it, the quicker you can “get your money back” and the quicker you’ll be financially free.