Friday, April 18, 2008

Purchasing Property With No Money Down: My Personal Experience

Have you ever seen those infomercials about purchasing houses with “No Money Down?” They are really well done. They have got got all sorts of people offering great testimonies about how they have gotten rich, buying rental properties, with absolutely no money out of their pocket. You see this guy, standing on a street corner, talking to someone, and he says, “I ain that one,” pointing to a beautiful colonial. “I also ain that 1 adjacent to it, and the 1 two doors down, and I’ll be shutting on the one directly across the street from it, adjacent week.” Helium then guarantees us that he have purchased 17 homes in the last eight or 10 months, with zero money down on the properties. Plus, in many cases he’s also paid no shutting costs.

And, let’s not forget, this same cat is grossing 10s of thousands of dollars monthly, and his nett worth is nearly one million dollars. So, he says.

Now, all of this expressions wonderful, so when the individual merchandising the course of study that volition learn you how to make this, at a bang-up terms of just $297.00, speaks, you are glued to his every word. “Real estate is the safest and fastest manner to do money, today,” the expert will state you.

So, can this really be done? Can you purchase houses with no money down? Can you go a landlord in as small as one month’s clip and start raking in the cash from those rent payments? The reply is an absolute “Yes.” It can be done, and I am cogent evidence positive, because I’ve done it. The inquiry you should be asking yourself is not can I purchase existent estate with no money down, but should I?

You see, this is a inquiry that the cat merchandising the No Money Down course, with all of his people and their great testimonies trusts you never ask. His advertisement and marketing strategy would collapse, if he gave anyone a opportunity to inquire this question, because he would be forced to lie if he answered it.

Rarely is the whole truth anywhere to be establish in infomercials, especially when the advertisement is about No Money Down existent estate programs. The infomercial do the thought and the programme expression so easy that any kid could manage it. It do it look like every American should be doing it, and we’d all be millionaires. But every American is not doing it, and many of the 1s who are doing it not only are not getting rich, they are actually going broke. The infomercial won’t state you this. That’s wherefore I’m here.

The Truth

Now, let’s get started with the truth about purchasing existent estate with no money down and the truth about being a landlord. The first thing you need to cognize is that they are both very bad ideas. Let me illustrate by using my ain experience in these areas. I started buying rental property nearly 10 old age ago. The first property I bought was a deal orchestrated by some existent estate con artist, who told me I needed just $2,000 to take ownership of this home and, in the process, aid out a adult female who was about to be foreclosed upon.

In two years, she would do clean up her credit, refinance the loan on the house, and I would make $10,000. Sounded good to person who was quick to purchase into anything that returned large dollars in a short time.

This worked for the first year, as the adult female paid on time, and I pocketed an extra $100 monthly. Later, though, things began to collapse, as the house began to need repairs, all of which the adult female couldn’t afford, so I had to pay for them. I set nearly $5,000 into the house in a four-year period. When I was finally able to sell it, I didn’t quite do back what I had set into it.

Meanwhile, I was eager to defeat this problem by adding many more. A slickness mortgage broker got hooked up with an even slicker existent estate prospector, and the two of them convinced me that they had a manner I could purchase houses rapidly, with absolutely no money out of my pocket. Although my experience will probably be adequate to edify you to the pitfalls of this theoretical account and of being a landlord, allow me state that I can’t stress enough how dangerous purchasing property with no money down is.

In six calendar months time, I had purchased eight houses – many with loans from the same wholesale lender. These lenders should have got been concerned with all of the debt I was building, but they kept approving loans, based on my good credit and rents covering the mortgage payments. One of the biggest problems, which I was not experienced enough to detect, was that most of the rents were just $50 to $100 above the mortgage payment.

“Don’t worry,” the investor/ streetwalker would say. “You’ll do all your money on volume. We’ll get you into 30 or 40 houses, and you’ll be pocketing $4,000 to $5,000 every month.”

As you might imagine, my head raced. I was making the huge sedimentations at that very moment. My bank account was fattening up at breakneck speed.

The Illusion

This is what people who purchase houses, using the No Money Down program visualize happening. After all, if you can purchase one house with no money down, why not five or 10 or fifty? For some ground – the vision of the dollar sign, most likely – Iodine failed to seriously see the care of these houses, the possibility of missed rent payments, and the opportunity that tenants might actually halt paying, altogether, forcing me to evict them – a time-consuming and extremely costly undertaking.

As you may have got already guessed, all of these things happened to me, after I had amassed 26 rental properties. In fact, oftentimes, all of these problems happened in the same month. Now, for awhile (when I had about 10 houses), if one individual failed to pay rent, I could cover it with the nine other payments. But when two, three and sometimes even five tenants didn’t wage in the same month, it was annihilating to my business. I had to travel to my business account and pay up to $3,000 at a clip in mortgage payments, with no income to cover it. Plus, I had to pay a property management company to get my tenants to pay or to evict them.

Soon, this became the norm, not the exception. There were changeless problems at my houses. Unhappy tenants led to poor care of the property and even more than care problems. About one year, after I had amassed 26 houses, I was having problems with roughly 10-15 houses and/or tenants each week. I was evicting at least two tenants each month, and approximately four to seven tenants were either buttocks on rent or not paying at all. Promises were made, payment programs arranged and few, if any, ever followed through.

It didn’t take long for me to recognize that this was no manner to do money in existent estate. Consequently, I got quit of these houses as fast as I possibly could. There were plenty of buyers, willing to take over my headaches, because they had the ability to do it work, they believed.

In 10 old age of being a landlord, I lost thousands of dollars and likely took some old age away from my life with all the emphasis I had endured. So, whatever you do, avoid the No Money Down Trap. There are much better, still cheap ways to do money in existent estate.

Learn the best ways at


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