Austin Miller built a $1.2 million real estate portfolio at age 31 — for free.
He’s a sidereal real estate investor who specializes in “creative” financing deals — homes he can buy without using his own money.
Austin is its author Free Homes: How to Build Your Real Estate Investment Portfolio With No Money.
His basic strategy is as follows:
- Find a killer deal on a home that needs some work.
- Buy it with the creative financing methods Austin talks about in this episode.
- Either do the work yourself or hire contractors.
- Put a paying tenant in the newly renovated home.
- Refinance the home with a traditional bank loan and pay off the original source of financing.
It’s game over positive monthly cash flow from rental income, plus building long-term wealth through tenants paying off the mortgage.
Austin has developed some unique and interesting ways for hard money and private money to finance his real estate purchases.
The best part – it really is a real estate hustle that can be done in a few hours a week, the end result is passive income from rental income.
Tune in to hear how Austin finds killer deals, buys the homes without risking his own equity, and then rehabs them ready to rent.
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How to find “discount” homes.
“Like in any industry, you have to get away a little bit,” Austin said.
Austin said when he started he would talk to bankers to see if he could find out about any foreclosures. He talked to real estate investors in his area, joined real estate investor groups, talked to real estate brokers, watched for “For Sale” signs when he drove around, and looked online.
He immersed himself in the industry as deeply as he could and even found a
two offers in the classifieds section of his local newspaper before.
When dealing with banks, Austin likes to reach out to smaller local banks. This way it’s easier to talk to a decision maker and more likely to know about deals in your area.
Hard money loans
Once you see a property you want to buy, you need to raise the money for the down payment, and Austin has some strategies for that.
When Austin graduated from college, he knew he wanted to be in real estate. His broker at the time introduced him to some hard money lenders.
Hard money lenders are small companies that want to lend money in the short term at a high interest rate. Austin ended up paying 14-18% at the time, but knew it would only be for 4-5 months while he bought, renovated and secured a bank loan on the property he was interested in.
Lenders mitigate risk by moving the money through a title company at closing. They will also take control of the property if you disappear or fail to make your payments to them.
Austin said it’s as simple today as doing a Google search for hard money lenders in your area. She recommends working with someone local who you can talk to one-on-one rather than larger companies.
Next, you need to make an estimate of the cost of restoration. You can do some research
up front, and Austin recommends using the 10-day research period after the deal closes to get some quotes from contractors.
Once the house is fixed, you can go to the bank and tell them you have a house with less than 80% loan to value and get a traditional mortgage to pay off the hard money lenders.
Private money
The saying in the real estate investment circle is, “Hard money is good, private money is better,” Austin said.
Austin said everyone knows someone with money, whether they know it or not. He even had a proposal from a friend’s father in the past when talking about his business.
Networking groups are also a great way to meet people who might be interested
private money lending. Austin went to a meeting, stood up and said, “I’m looking for someone with a lot of money.”
A woman passed him a note saying she was interested and they ended up making one
agreement.
Another reason to find private lenders instead of hard money lenders is because you can secure lower interest rates. You have a lot more say in what the interest rate will be, Austin said, so you can usually expect to pay 7-10%.
Limitation of your liability
It’s always possible for a deal to go bad, so it’s a good practice to sign real estate over to an LLC to limit your liability and protect your personal assets.
Austin has all of his properties in the same LLC, although he knows some people who used a different LLC per property. Once you reach a certain point, you can use the umbrella policy, but Austin recommended talking to your attorney to find out what’s best for you.
Buying a house with a credit card
Austin was looking for ways to get financing when he came across a balance transfer
checks. These are checks that you can have written for whatever credit limit is on your credit card.
After calling the number on a few of his credit cards, he found a lender willing to write a balance check. The balance had an annual interest rate of 6%, which rises to 12% after one year.
It wasn’t the best price. could do better with a private loan. Then he called another company and found out they were writing balance checks at 0% for the first year, with a one-time fee of just $75.
Austin increased his line of credit to $16k and asked them to send him a check for the full amount.
He found a property for $12k that needed about $50k of restoration and knew he could
appraise the property for $80,000 when the work was completed.
He got the additional funds for the restoration work from a bank loan and so on
he brought a house with his credit card.
Related: Check out my free Credit Card Rewards 101 course!
Deals gone wrong?
Austin has had projects go over budget and had to dig into his pocket, but he said overall the deals have evened out.
Without talking about actual horror stories, Austin said, “Minimize your risk, protect your downside, and you’re usually fine.”
Austin’s #1 tip for Side Hustle Nation
“Be an executor. someone who isn’t afraid to take action.”
Links and Resources
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