Home Mortgage How to Buy Property With Little or No Money: Ex-Mortgage Underwriter

How to Buy Property With Little or No Money: Ex-Mortgage Underwriter

by Joshua Garcia

Chris Gerbig, a former credit manager at Wells Fargo and Bank of America, had a strong desire to avoid the traditional corporate path that often entails sitting in a cubicle every day until retirement. He and his wife, Tori Gerbig, made a bold decision to venture into e-commerce after Tori had success selling clothes on eBay. In 2014, they launched Pink Lily, a brand that quickly gained momentum and allowed them both to quit their day jobs.

Chris’s experience in the banking sector, particularly selling subprime loans, taught him valuable lessons about financial responsibility and the dos and don’ts of home buying. He developed an obsession with saving money, building credit, and making smart financial decisions. This knowledge would later prove invaluable as he embarked on a journey of real estate investing.

To date, Chris has acquired an impressive portfolio of 28 single- and multi-family homes, with a total value of over $28 million at the time of purchase. Two of his properties are currently estimated to be worth $491,000, with the rest reflected in sales documents he provided to Insider. In addition to these properties, he also owns a warehouse and two self-storage facilities.

For individuals looking to build a real estate portfolio with little or no money down, Chris shares some valuable tips. One common mistake he noticed during his time in banking was people buying properties they couldn’t afford. He advises against overleveraging yourself and cautions against taking on too big of a house or rehab project. Instead, he suggests starting small with something you’re comfortable with and gradually growing into bigger purchases.

When Chris purchased his first house in 2010, he didn’t have enough cash for a conventional mortgage down payment. He opted for a Federal Housing Administration (FHA) loan, which requires a lower down payment and allows for a lower credit score. This type of loan proved to be a helpful option for Chris, allowing him to get his foot in the door of real estate investment.

Another option Chris highlights is seller financing. This arrangement involves the seller providing the loan, bypassing the need for a traditional bank loan. Terms can be negotiated between the buyer and seller, including the possibility of a deal with no money down. However, it’s crucial for buyers to ensure they can cover the monthly payments with the property’s cash flow.

As individuals gain more experience in real estate, Chris suggests considering private lenders. These lenders can be family, friends, or small firms that offer short-term loans. Private lenders often charge higher interest rates due to the increased risk they take on, so it’s essential to have a solid track record of repaying previous loans.

Chris emphasizes the importance of running the numbers when evaluating a property. He uses key metrics such as the cap rate (cash flow compared to the purchase price), cash-on-cash return (cash paid on the down payment compared to annual income), expense ratio (total expenses compared to rental revenue), and expected value at exit (potential value increase when selling the property).

Building a real estate portfolio with little or no money down is possible with careful planning, research, and a thorough understanding of the numbers. Chris Gerbig’s success in real estate investment is a testament to the importance of financial responsibility, smart decision-making, and a willingness to think outside the corporate box.

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