Buying Big Things with Little Money

Happy Wednesday!

You are gonna have so many more tools for your toolbelt today. I’m excited!

Catch 22s kinda suck, no?

You want to start a business so you can quit your 9-5, but your 9-5 + family time is so time consuming that you can’t start a business. Catch 22.

You want to buy a skid steer so you can rent it out to make more money to buy things like skid steers but you can’t afford a skid steer.

You want to buy real estate to make more money but you don’t have enough money to buy real estate.

You get the idea.

Business is just problem solving at its core, and all problems can be solved.

When I was having my house built, I walked into my office during the framing process and noticed how far away the wall outlets were going to be from my future desk, which would be in the center of the room.

I asked the builder “Hey, I noticed you ran the cable for the floor outlet in the living room before you laid the foundation. I’d really like a floor outlet in the middle of my office, too. But is it too late for that? Can it be fixed?

And he said “We can reverse, change or fix literally anything in the building process at any stage, the question is how much are you willing to pay?”

That stuck with me. Everything is figureoutable.

And what did I do? I paid it. Maybe a few hundred bucks, I can’t remember. And it was worth it. That floor outlet is powering this MacBook as I type.

That’s what I’m going to talk about today. Buying big assets with little money. Solving big problems with creative solutions.

When I was 21 and newly married I was convinced we were going to buy a house. The year? 2008. The economy? In shambles. My job? Waiting tables for $2.13/hour of provable income + tips. My wife had the same job at the same place.

We were also both full time students with full time student loan debt. (Here’s a longform tweet of my real estate story)

We still wanted to buy a house. We found one we loved for $90,000, so we walked into a bank and sat down with Ginger Pennington.

Everything I knew about real estate I had read from books at Barnes and Noble that I’d never even purchased.

(This is my way of saying I knew almost nothing about real estate).

Ginger told me that we’d HAVE to pay PMI - mortgage insurance, because we were such risky borrowers.

I said no.

She said it was mandatory, unless I wanted to put 20% down.

I said no, I had 3.5% to put down (mostly pell grants lol), and that I’d keep trying other banks until one of them was okay with that.

She reluctantly acquiesced and promised to see if there were other options. Guess what, there were!

We ended up getting a conventional loan that looked exactly like an FHA loan - 3.5% down, a very competitive rate but with no PMI, the key differentiator.

Why did I say no to PMI? Because that’s one thing I remembered from my books. Banks often make it seem like you can’t get around it, but you can get around it just like you can get around buying an extended warranty for your car.

Banks have an easier time re-selling their loans with PMI, so they try to push it on you. But in 2009 they were a bit less reluctant to play hardball.

I’ve since passed on that advice to 4-5 friends buying their first home and they each had the same experience I did, start to finish.

That “no” saved me and others many thousands of dollars.

By the way, PMI protects the lender, not you. And it can’t prevent a foreclosure or bankruptcy. I saw it as a waste, but others disagree. That’s cool.

BTW, I owned that house for 11 years, renting it for 9 of those. Here it is:

My points are these:

• Everything is figureoutable.

• When you hear a “no” it’s because you aren’t preventing a creative enough solution or talking to a creative enough person.

One of my favorite interviews ever was with my friend Isaac French. In our interview he talks (39:44 timestamp) about a friend that is building an incredible Airbnb with no money. How? He’s been documenting his whole process via short form video. That attracts an audience…but not just any audience. It’s an audience that wants to support him! They follow his story, come to love him and therefore want to give him money!

Ok, so lets get to the meat of it.

Let’s say you want to buy a $500k piece of real estate, let’s say an RV park, and you have almost no money to your name? Here’s exactly what I would do:

1. Be loose on the exact asset I want to buy. If you get married to one specific asset and the owner won’t take your call, won’t work with you or doesn’t want to sell, there’s nothing you can you do.

“But Chris, isn’t everything figureoutable?”

Well, yes, except for removing agency from another person. Not even God can do that, so good luck on doing it yourself. You can “figure it out” by waiting long enough or wearing him down over months or years, but ain’t nobody got time for that.

So don’t fall in love with 1 piece of real estate. Fall in love with a business idea or an asset class. So back to my RV park example, here’s the next thing I would do:

2. Find an owner that will be friends with you and trust you. Someone who will hear your story and want to support you. Find an owner that says “You remind me of myself when I was your age.” Keep looking until you find that owner, and once you do, keep working that relationship.

Tell him about what you learned about optimizing RV parks. Offer him value. Compliment him on his asset. Visit him in person multiple times. Bring your spouse and kids (if applicable).

Think of it this way:

If you desperately needed $1,000, would your mom give it to you? Of course.

Would a stranger on the street? Likely not. I’d say a 2% chance.

But it’s a spectrum, right?

If you spent a little time with that stranger and told him your story, why you need the $1,000, what you two have in common, etc, what is the % chance then? 20%? 50%?

(Keep in mind, I’m writing all this from the assumption that you are worthy, knowledgeable and deserving of a seller working with you.)

This is what you’re trying to do with a seller.

The best shot for buying a big asset with little money is seller financing.

If you have to borrow from friends and family then that means:

1. You need to have friends and family with money.

2. You likely need to convince several of them.

3. You will therefore risk your reputation and relationship with all of them.

I’m also biased. Aside from $55k, once, to start my phone repair business (thank you Andreas!), I’ve never been able to borrow from friends and family to start a business or buy real estate. So I don’t feel comfortable giving you tips on doing this.

With seller financing there’s less surface area for risk, and the seller can get his asset back if you default!

Don’t not ask for seller financing because you assume he’ll say no or that it’s not a good deal for them. It very often is!

I’m spending the bulk of this email on seller financing because it’s the bulk of the opportunity.

To the right person, your story about riding around in the truck with your dad to fix a rental property is worth more than your proof of funds.

So tell your story. No, SELL YOUR STORY!

I’ll get into seller financing tactics in a moment, but if, for some reason seller financing is just impossible, here are your next options:

Start consuming short form content from others doing what you’re trying to do: Build their dream, build in public, etc.

What are they doing? What are their hooks? How often are they posting? What type of asset are they buying or building? What do the comments say?

The comments are the most valuable part of reverse engineering what’s happening on social media.

Then start to copy them. Put your own twist on it.

(BTW, should I do an email about optimizing short form videos? I kinda want to.)

Anyway, you’ve got to shed every ounce of pride or ego, or this won’t work. You can’t be hungry, driven and prideful, it doesn’t work that way.

Get on the phone with anyone who will take your call. Sell your story to everyone, online and in person. Ask for referrals. It doesn’t have to be friends or family, it can be anyone.

Use my scraping guide to reach out to local business owners via text to tell them your story over lunch. Why business owners? Because their cell phone is often listed and they are more likely to have money than someone from off the street.

Once you raise money, you don’t want to screw up the custody of the funds! You really need a third party to help manage that, aside from simply a business checking account.

There’s a difference between “move fast and break things” and “move too fast and get indicted for fraud.” That’s where today’s sponsor comes in:

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The long and short of it is this: seller financing is your friend. Here are some of my favorite structures:

• Balloon Payment Deal

  • Pay minimal or no down payment initially.

  • Small monthly payments for a few years.

  • A large balloon payment due at the end (refinance or sell the asset by then).

• Interest-Only Payments

  • Only pay interest for a fixed period (e.g., 5 years).

  • Lower payments early on, with the principal due at the end or refinanced.

• Graduated Payments

  • Start with smaller payments that increase over time.

  • This gives you time to improve cash flow or resell the asset before higher payments kick in.

• Partial Seller Carryback

  • Use a combination of traditional financing and seller financing.

  • Seller covers part of the loan (e.g., 20-30%), reducing the cash down required from you.

• Shared Appreciation Mortgage

  • Seller agrees to take a percentage of future profits upon sale instead of a higher sale price today.

  • Lowers upfront payment while the seller shares in future upside.

• Lease-to-Own Structure

  • Enter into a lease agreement with the option to purchase.

  • Part of your lease payments go toward the purchase price, reducing cash needed at closing.

• Zero-Down with a Higher Interest Rate

  • Propose zero down but offer the seller a higher interest rate or a longer loan term.

  • Incentivizes the seller to skip the upfront cash in exchange for higher returns.

• Asset Swap or Services in Lieu of Down Payment

  • Offer other assets, services, or equity in another venture as part of the down payment.

  • Can reduce or eliminate the need for cash.

If you really want to get into the weeds, here’s a recording I had with my friend Casey this summer where he talks all kinds of creative deal structures.

People paid a lot of money for this! But you get it for free.

Hope you’re having a great week. If you want my weekly real estate newsletter, just click this once. No need to subscribe on the landing page.

Thanks for entrusting me with your valuable time. You can find my podcast below:

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Your favorite toxic optimist,

Chris Koerner
chrisjkoerner