No money down real estate investing

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No Money Down Real Estate investing

The truth about no money down deals

Every night there is someone who made their fortune with nothing down from their kitchen table telling you to buy their real estate system. They claim the deals they made were with absolutely no money and resulted in large chunks of cash being deposited into their bank accounts. 99.9% of these guys are liars. Do not get caught up in the "no money down" strategies. They do not exist for the common lay person.

Someone who has perfect credit, a property 20% below market value, and a large income, may be able to walk into the bank and walk out with a mortgage. But even this person will have to pay closing costs, origination fees, and premium mortgage insurance. There is money being exchanged from the buyer to the seller or lender or both.

The closest someone can get to a no money down deal is by lying to the financial institutions to get the loan. This is not good business practice. Not to mention is it unethical and illegal. In some jurisdictions it is a felony. As a matter of fact in every area I know of it is a felony to lie on a mortgage application. Two reasons for this is because you are making a sworn statement (remember most mortgage papers are notarized) and because the lender can be held accountable for falsifying documents by the United States government.

There is no such thing as a nothing down deal. Real estate investors know this. Real estate agents know this. The lenders know this. It seems the only people who don't know it are the real estate "experts" trying to sell the systems which say it can be done.

There are ways to make the investment as minimal as possible. You can ask the seller to pay closing costs. You can ask the seller to pay the down payment. You can ask the seller to hold the note for a matter of time. No matter which way you go the finance companies are going to want some money from someone. The seller most likely does not have it. (Remember these gurus are citing examples of distressed properties being bought with no money down.) You are being told you don't need money. So where does this leave the lender? With the ability to say no.

There are ways to invest in real estate with little money up front. The days of creative finance are pretty much over. People have gotten into a real estate crunch in today's housing market. They do not want sweet nothings. They want cold, hard cash. And they want it now. Promises of what you can generate for the seller are no longer good enough. No matter how motivated the seller is, the bottom line is always the money.

The best way to invest in real estate is the oldest way. Look for a property you can buy for under the market value, buy it, and sell it for a profit. There are no problems with this strategy. There are no legal issues with this strategy. Everyone gets what they want with this strategy. The only thing the no money down deals gets is someone trying to sell a system which no longer works so they can spend your hard earned cash.

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