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Banking and Finance  » Building Wealth: Don't Waste Your Money on Real Estate

Building Wealth: Don't Waste Your Money on Real Estate

Article:

You've seen the real estate guru advertisements for books, DVDs,

programs, seminars, and mentoring coaches promoting

no-money-down deals. Perhaps you've watched the infomercial on

TV with the people telling their stories of how they made

millions investing in real estate with no-money-down and cash

back to the buyers.

Maybe you, like me and many others, have purchased books or

expensive systems based on these no-money-down and lease-option

investing schemes. Here's the rest of the story.

Perhaps you've seen an ad in your local newspaper offering a

home with 100% financing from the seller or a lease option. You

should know that the investor offering these types of deals

makes money by purchasing the property at a discount and selling

the property for an inflated price.

Lease-option real estate investors play the odds. They bet that

most people won't be in a position to purchase the lease-option

home in a year. So the investor seeks a hopeful tenant to make

higher than average rental payments, pay more move-in cash, and

make the investor's mortgage payment. Those tenants who do

eventually purchase the home paid much more for the home than

the investor. Many tenants never come up with a new mortgage

loan to purchase the property when the time runs out. Either

way, the real estate investor makes money.

First-Time Home Buyers

If you need to buy your first home to live in, these

home-purchase methods may help you if you have terrible credit

and can clean it up in time to finalize the purchase in a year.

Just understand that you're paying too much for the property and

may not make any money on appreciation. On the other hand, if

you have strong credit, you can purchase a bargain house with no

money down legitimately.

Tips for Beginning Real Estate Investors

Don't buy overpriced property! Avoid 100% investor-financed

"deals." You will have to wait too long to make any money. Plus,

the rental income most likely won't come close to making the

mortgage payment for you.

Don't waste your money buying real estate guru books, DVDs,

programs, seminars and mentor-coach promoting no-money-down

deals. Would you buy a book on how to make a fortune on the

Internet that was written in 1995?

These out-of-date, no-money down schemes, tell you to look for

home sellers in distress who will let you buy their home for

no-money down with the seller financing the property for you.

This system worked last century. Today's home sellers know that

they can get a buyer who can get their own financing.

Plus, today's home sellers know that other sellers have lost

money selling with no-money down. They've heard the stories

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where home sellers didn't get paid and had to foreclose on a

property. They've heard the stories where the investor-buyer

rented the house to tenants who trashed the property. They've

heard the stories where the investor-buyer collected the rent

and didn't pay the home seller.

To get started building wealth in real estate today:

1. Get your credit ready for mortgage financing. (Mortgage

credit differs from consumer credit.)

2. Buy right. Don't overpay for deals that sound too good to be

true. These schemes are too good to be true!

3. Guard your money. Don't get yourself in over your head with

high mortgages on rental properties that cause you negative cash

flow and jeopardize your financial well-being. The best way to

do this is to make sure you get the best mortgage rates on a

bargain-priced property.

You can buy investment property for little -- or even no-money

down. Get started by buying your home or a second home. Real

estate investing offers you the most tried and true way to build

wealth when you avoid investing schemes.

Copyright © 2005 Jeanette J. Fisher. All rights reserved.

About the author:

Jeanette Fisher teaches beginning real estate investors five

easy steps to find, finance and fix houses for profits. Free

ebook on fixing houses using interior design strategies for

top-dollar sales, http://www.doghousetodollhouse.com/