Dad is FIRE

One dad's journey to Financial Independence Retiring Early

Other people’s money. Carleton Sheets and no money down

Real estate is a wonderful investment for many reasons. One of the best reasons is leverage and the ability to buy with no money down. You can buy as asset with other people’s money and have other people’s money pay for the loan.

When I was first learning in the late 1990s I stumbled across some books on tape from the library. Yes, books on tape. Yes library. There is so much free information at the library! The book was by Carleton Sheets and was about buying houses with no money down. I watched some of his videos when testing out my VCR not too long ago. So cheesy, but still mostly relevant.

Carleton Sheets inspired me. His tapes focused on leverage. They focused on Other People’s Money. I don’t think that was his phrase, but it was certainly his concept. I took his advice and bought several rental houses with other people’s money. Here are some examples that I actually did. I haven’t done these in 15 years, but they worked then and some derivation would work now.

Other People’s Money with a Credit card.

What? a credit card? yes! My dad, who was mostly around to tell me what I was doing wrong gave me trouble for this. He told me I would go bankrupt. But it was a math problem. My credit card had a 0% interest rate for 12 months. I wrote a check off the credit card for a down payment on a house. I didn’t see it as risk. My math said the rental house income would cover paying off the down payment.

This can also be done with personal lines of credit.

Other People’s Money with a HELOC

A HELOC is a Home Equity Line of Credit. My first house had quite a bit of equity from appreciation in the early 2000s. I took out a HELOC mortgage. This let me write a check secured by the value of the house. The interest rate was pretty low. I saw this as low risk because the mortgage on the house I bought covered it.

Other People’s Money with Phantom Equity

I identified a house I wanted to buy. I made the mistake of using my dad’s real estate agent. He front ran my offer and bought it with cash. For himself to have as a rental. Great guy. I told him I still wanted it. He agreed to sell it to me for 15k more than he bought it for. This is real! Don’t do this to your kids! I spoke with my lender and they agreed to let me buy it with no money down by assessing it for even higher.

The lender required 15% down payment. They agreed to have the loan be for 15% more than the sale price. My dad still walked away with the same amount. This was basically a phantom down payment.

I also sold a house using phantom equity. I flipped a house with a friend. We agreed to hold a 15% 2nd mortgage so the buyer could have a down payment of 15%. This was dumb, and I don’t know if it’s even allowed today. The buyer foreclosed on the house. I would do this as a buyer though. The risk is on the seller.

Other People’s Money with a Grants and Forgivable Loans

These are very common. I didn’t know about them when I was buying houses. Essentially many municipalities and organizations will lend you money for down payments that they later forgive for jumping over low hurdles. Examples include cities giving $5k towards a down payment as long as you don’t move in first 5 years.

Borrow from family and friends.

This was never a personal option for me because I did not want it to be, but I am listing it here.

Other People’s Money – Rent

This is the best of them all. Once you own the house you have a tenant pay it off for you. This was my entire strategy. Most landlords seek income. Instead I had mortgages with shorter time lines. My entire goal was have other people pay off the houses as quickly as possible. That’s how I am able to retire early. Longer mortgages have lower payments but you pay much more over the life of the loan in interest. Instead consider sacrificing more income for debt pay down by having shorter mortgages.

Be smart!

Listen, doing these strategies increases your risk. Be smart about it. Make sure your rent can cover all of your expenses, including paying off the debt used for a down payment. This is critical. Do not pay a house you can not afford!


The idea of you need money to make money isn’t true with real estate. You do not need much cash. I started with $800 cash. There are many ways to fund the down payment.

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