MWB Series: How to Invest in Real Estate with No Money Down

Sadhana Sabharwal 0:00

My name is Sadhana Sabharwal, and you are listening to Millennial Wealth Builders.

Danielle Desir 0:16

Co hosted by Acquania Escarne, the host of The Purpose of Money, and Danielle Desir, the host of The Thought Card, Millennial Wealth Builder Series is where we share the stories of women of color, building wealth.

Acquania Escarne 0:32

But this isn't your ordinary interview based show. Throughout the series, you'll be hearing from women who are creatively

Danielle Desir 0:39

securing in the bag,

Acquania Escarne 0:40

Stacking coins.You know what we mean?

Sadhana Sabharwal is known as the Single Mom Millionaire. She was divorced and left with three young boys with no financial support from their father.

Sadhana Sabharwal 1:02

I got married at 19. I had three kids before the age of 26. And I became a single mom at the age of 34. And I've raised my three boys since then, on my own without a single dime from my ex husband. Because I think when I got divorced, I felt like I would see my kids and I would be thinking when they were younger, honestly, I could make them happy with $1 $2 $5. That's all their demands were but when it as they grew older it was they were asking for $20 or $50 or $100 at a time. And like how am I going to do this on a real estate law clerk salary, it's impossible. I was looking for a way to make extra income to support my three boys.

Real Estate just happened to come by I think if it was forex trading, I would have probably gone into forex trading. So it's just that's what came into my awareness at the time. And I think that's what I flew with. And I'm also a law clerk. I'm a full time law clerk as well. So it was something of a known territory as well. So when I was introduced to real estate investing, it was like something I could continue on my journey. So it wasn't like a completely new journey, even though I had never invested in real estate before.

So I work at a law office and one day a client, came in, she was renewing her mortgage. And as I was looking at her documents, the mortgage amount was something like 300 and change. And I'm thinking to myself, my mortgage payment is not $300, my car payment is more than that. So I started asking her questions. And shortly enough, she invited me to a club that she was opening up, which was called, I can't even remember the name anymore Canadian financial freedom. And I attended the class and then she became my very first mentor. And then the very first book that he recommended, and I recommend everybody read that book, because it's just phenomenal. It is Rich Dad, Poor Dad, that is what got me started on my journey. You know, when you flip your switch to say, assets bring you money and liability costs you money, really what does your house do for you? It costs you money every month, right? Unless you make it into an income producing something like as long as it's bringing you income, it's an asset. But if it's costing you money, it's not. Like right now my house that I've been in since before my ex has been left, I have finished the basement, it brings me extra income. So now it is an asset. It pays for my expenses for my house. So it's not a total drain on my budget all the time every single month, right?

Acquania Escarne 3:48

Most cultures push individuals to seek higher education. But a lot of people do so at the cost of racking up student loans. Sadhana was determined to have her sons get the education she never did debt free.

Sadhana Sabharwal 4:02

Oh, this is a this is a limiting belief that I had. Okay. I've always believed because I did not go to university. I'm not smart. That's been my biggest challenge all my life because I'm really not. Like I said, I've never gone to university. So for me, when I saw that my kids were wanting to go into higher education and stuff like you know, university and then they've gone on to do medical schools and business schools. It became a personal mission for me, and this is why I was looking for extra income because there is no way I could have done any of that on my law clerk salary. So for me, it was important just because I'll say number one, I'm Brown. And number two, my kids were smart, so I did not want them to see because I know how much debt a student comes out of after university. I have a coworker who has just done a regular law clerk program. And I think she's been out of school for I'm going to say more than 10 years and she's still paying their student loans. And for me, that was a no, no, because I can't I, in my right conscience, I cannot have my kids start their life off with that much debt. And if I can do it, like if I could even just give them the education, and I don't do anything for them afterwards. I'm totally cool with that, because I've done my part. Now, whether you get married, whether you buy a house, hey, you're on your own, I've given you the footing. I've, I've taught you how to fish now go out and fish for yourself.

Acquania Escarne 5:33

Over time, she managed to buy and sell over 30 properties using none of her own money while working full time as a law clerk. Today, she has successfully put her boys through medical and business School, and teaches others how to invest in real estate with no money down in her No Money Down Academy.

Sadhana Sabharwal 5:51

This is my favorite part. I love no money. Because I have bought and sold 35 properties over the last few years. Most of them with no money or very little money of my own. Now, no money just number one, let's define what no money down means. No money down means that money is still required to buy a property, it's just not my money. It may be your money, it may be neighbors money, it may be a mortgage money, it may be line of credit, money may be credit card money, money is required. It's just that I don't have to have the hard cold cash to go buy that property. So now when I say no money down, one of my very first deals, I bought a single family home, it was I bought it on a tax sale $5,000. I still own that home today, which is 12 years later. And I bought it for $5000. We fixed it up with Uncle Home Depot. And afterwards I went to the bank, refinanced the property took all of my money out and the property is still running on its own. So how much money did I put in? no money at all? Right.

So another deal that I did was I bought a six plex It was $106,000. That's the price I negotiated. I borrowed 25%, down payment from a family member and I got the 75% as a mortgage from the seller. So now all I had to come up with was a couple of thousand of closing costs. I owned the property for about five, six years, I can't remember exactly now, because this is 12 years ago, I think it was five years. And then at the end of it, I sold it for $165,000. $2,000 to own a property that's six units. That was ringing me, let's even say $600. I think it was around $700 a month. But I was able to own that property. And I made a profit at the end. Anytime I had leftover money I just gave them. So let's say if I had $1,000 in my account, okay, here's $1,000. Here's the next thousand dollars. So that was just my prerogative, meaning in the sense that if I said I've got $700 coming into every two months, I gave it $1,000. And it was paid off in two years, I did not take any positive cash flow from that property until that person was paid off. For that first deal. I'm not going to say other deals were not like that. But just for my first deal was they wanted to see me succeed, and they wanted to help me out.

Because I mean, you know, it's either you give me charity, or you give me something like, you know how I talked about teach me how to fish and I can eat for life? Or give me the fish and I will eat for that night and I'm hungry again. Right? So yes, they could have given me food or you know, okay, here's an extra $500 a month for your kids and all that stuff. But how long is really not going to continue? It's not. But if they see you working hard that you're doing something I mean, there were times we would drive for like, five, six hours to go look at properties and still be home by dinnertime. So there is hard work involved with anything, anything you want to succeed at. You have to put in the work. You know, I'm sure you guys have heard 10,000 hours to perfection, basically, right? So anytime you want to get good at something you need to put in 10,000 hours. Now have I put in 10,000 hours in my real estate? Definitely. Yes. But today, I can say I can do this with my eyes closed. I mean, I haven't done super amazing, like, you know, 200 buildings or something but no, and that's okay, because my goal was really just to put my kids through college university. And that was it. I never thought I would be doing real estate because Okay, I mean, I've still got about six or seven properties at my highest number. I had 18 properties at one time. And as the kids went through school, I had to sell them. And that's, that's okay, because that was the whole purpose. That was there. reason I did it? Because I mean, you know, as a law clerk, where do you make $5,000 a month? After all the expenses are taken out and stuff, we're not talking huge numbers. So for me, it was all about how do I make extra money? How do I make extra money? Nothing else mattered. It wasn't like, Can I do this? No. How can I do this? That's the main question you need to ask yourself, it's not about oh, my God, I can't do this. Oh, my God, who's gonna give me a mortgage? Oh, my God, who's gonna date me? I'm, you know, 50 year old with me? Do you get what I'm saying? It's whenever I tell myself if I can make it come true.

Danielle Desir 10:40

For someone who has a family member who maybe has the means to provide them with a low interest loan, or just a loan that they can pay at payback without even thinking about interest? How would you recommend someone to approach that family member?

Sadhana Sabharwal 10:56

If the family member sees that you're working hard at something? And they also see you're excited about it, they see how much time you're putting in it. You're not just randomly going to show at uncle Joe's door and say, hey, can you lend me $25,000? Who are you? Nobody? Now, all of the things are built through relationships, if I don't speak to that family member ever before, and all I do is go and show up and say can you do this for me? It's not going to happen, right? I took them along on a journey with me. I did not just say, Oh, I'm like, you know, three months later, I'm like, Oh, I found this property. No. I have brought them along on my journey. So when someone is on a journey with you, they are more inclined to say yes, because they want to see you succeed because they see your hard work you're putting in.

I have found properties on MLS, I have private properties on Kijiji, I have found properties on just regular internet. So the idea behind it, the way I invest is that the property the numbers need to make sense. It doesn't matter whether the property is a single family home, and it's $50,000. Or if it's a duplex for $70,000. Or if it's a five unit building for 300,000, or an eight unit building for 150,000. The idea is you need to know how to analyze a property. How do you figure out the numbers? Like for me, I never invested for appreciation. That's not to say I didn't get appreciation. But on a regular basis, what was my purpose, my purpose was to bring money in. So I looked for properties, or I only bought properties that had the potential to give me something every single month. I'm not saying it's right. I'm not saying it's wrong. That's what's worked for me. And I mean, you know, I've done what I had gotten out there to do.

Danielle Desir 13:10

Do you have some off the hand, like really quick tips for helping folks to find those properties that allow you to have a positive cash flow at the end of the month?

Sadhana Sabharwal 13:22

The way I started was by going into smaller towns, there is Sudbury there is su Sainte Marie, Ontario. So though, anywhere you are, if you're in a metropolitan city, you're not going to be able to cash flow a whole lot. So you've got to go outside of that. So for me, let's say I went maybe, you know, three hours away at that time, because it was hard for me to even read property at $300,000. I'm not gonna say that it will increase at the same speed as a metropolitan city. But then again, do we have a crystal ball? We don't, right. So as I said, For me, it worked that I went into smaller towns, and I looked for a property where the property was going to give me something every single month. That was my, if it didn't cash flow, I wouldn't look at it.

My kids are grown up. I don't have to pay for any of their expenses and I am such a free person. I am an empty nester. So if I was really to think about do I need to be building wealth? Really? No, because I've covered my retirement. I've got enough real estate investments that I'm financially free. I work because I like to work and I What am I going to do at home like literally stare at the walls. So that's not in the horizon. I'm at a place where I want to serve other people. God has been super kind to me. And I have been able to achieve what I wanted to achieve, which was to put my kids through university. I really didn't have any other goal. And right now yes because I've got real estate, but I will be supplementing my retirement income for sure. I'm still working by choice. And if that was the case, then what am I going to do with my time. And that's where the idea came about producing an online course. And I called it the No Money Down Academy, the very first module is mindset. And I made that on purpose because unless your mindset is of a winner, you're not going to win. So it's very important for me to put your mind in the place where it's going to expect itself to succeed. Then after that, I go into the skills of it like you know how to find a property, how to analyze a property, how to talk to people who can fund it for you, there are scripts, there are ads, I am nothing, nothing, nothing short of grateful for every experience that I've had in my life good or bad, good and bad, not or bad, good and bad, including my ex husband leaving me because that led me to my soul journey, not sole journey but also my soul as well journey. And for me, sitting here today, 20 years later, and I always say this. Would I change me today? Absolutely not. Absolutely not.

Transcribed by https://otter.ai