Banking and Finance » Make a Fortune in Real Estate with No Money Down! Really?
Make a Fortune in Real Estate with No Money Down! Really?
They're sold on late-night TV, hawked at seminars, they sell in
books, and, admit it, you've wondered about them--those programs
that tell you that you can make a fortune investing in real
estate with no money down. Is it true? The answer is, yes,
but....
If you can find an undervalued property, use somebody else's
money, or do a sub2 deal (check your glossary at the website if
you're unsure about that term), it's relatively easy.
Undervalued properties are somewhat hard to come by in these
overvalued days in most areas, unless you're ready to do some
serious rehab work or have a keen insight into market trends in
a specific area.
And, most lenders want you vested in the deal with some
significant cash--understandably. Why should they take all the
risk? At the very least, they'll want you to be able to show
that you can maintain the property until it turns around or that
you can turn it over quickly and profitably (which usually means
selling it to somebody willing to pay a premium because of
less-than-great credit).
BUT, don't let this discourage you. Instead, let it sharpen your
insight as to what makes for a good deal, understand how lenders
view them, and think creatively about financing so that a good
deal can be had by all. Here's one way.
Find a motivated seller, and line up a partner who's seeking a
good return. Form an LLC with the buyer. Have the LLC buy the
property at a discount from the market rate in your partner's
(the buyer's) name--it's his money, after all. Next, run a "for
sale by owner" ad, stating that "poor or no credit is okay."
Your phone will ring. They'll pay more to get in, but they'll
have to be able to pull together a decent (10% or more) down
payment and have a solid job. Your investor partner gets that
cash to get his investment back. Then, sell the property to the
new buyer and split the monthly cash flow with your partner.
You can repeat this process a few times and have a significant
monthly cash flow, all with no cash from your pocket. Your
contribution will have been putting the deals together. So, yes,
"no money down" can still work, if the right people are in the
picture. Keep your eyes open for possibilities, your contact
list current, and your ambition level high, and you can do it.
About the author:
Lynn Stonebraker has worked all sides of the real estate
industry, from construction and supply wholesaling to investment
banking. Her ability to simplify finance and marketing keep her
busy consulting. You can profit from her training by subscribing
to her weekly newsletter, "Successful Real Estate Investing,"
available at Real
Estate Info.
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