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Why do people insist that "no money down" is possible when buying real estate?

RazorAzoth

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I'm interested in getting into real estate, however, I really don't want to use the decent amount of money I have in savings for real estate. In my mind, it's just better to have liquid cash on hand in case of an emergency. It eases my mind.

So I read this thread of this forum.

http://www.sosuave.net/forum/showthread.php?t=22304&highlight=guide+wealthy

I was excited to hear about no money down in real estate. So I asked around to quite a few people and they all claim that "no money down" is a joke and not possible. 20% seems to be the minimum.

Why do people make it up and lie about it?
 

Bible_Belt

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Carleton Sheets is a joke. His technique only worked in the early 80's when interest rates were dropping from the 20% range. In the 90's I bought and worked a foreclosure program sold by an infomercial guru named William McCorkle. The Feds put him in jail for selling an investment scheme that was impossible for the average person to make money doing. I actually made money, but only because I put in almost a full-time effort. Mostly it was a learning experience.

Low and zero down payment mortgages were a large part of the recent and ongoing mortgage crisis, so down payment requirements have gone up a lot in the past few years.
 

Alle_Gory

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No money down works great... if you can find a buyer right away. (Good luck with that.)

If you don't, congratulations on that piece of land you just bought which you can't pay for.
 

Julius_Seizeher

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"No Money Down" was a big part of the tidal wave that finally crashed in 2008. 20% is going to be standard, but I say the more the better. Get that motherfukker paid for and get some positive cash flow.

It's a great time to be picking up some strategic rental properties. Demand is strong in the rental space, and it's obviously a buyer's market. If you have cash and good credit, you can make some moves now that will pay off down the road.

I'm looking at getting into rental real estate myself. I know a man who owns a prominent property management company in the area, and they have a program for leasing from landlords that I am interested in. I just have to pull the trigger and do it; all I have to do is pick up a good rental property and let the property manager mess with getting tenants and day-to-day stuff. I won't make quite as much as I would renting it myself, but I also won't have the added headache of property management; all I have to do is sign checks.
 

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Vice

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I'm in real estate, and let me tell you that when they say "no money down", they mean none of YOUR money down. The down payment is usually borrowed, usually from a bank, secured against something of value, or equity in another property.

As long as you still make money at the end of each month after expenses, you may have a good "no money down" deal.

I do love how skeptical and non-believing people get about this kind of stuff, it just makes it much easier when there's less competition.
 

Stud

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Every RE deal I do is as close to no money down, or as another poster put it, none of my money down as possible. I just started with zero properties last January and by the end of this year I will have 10 units. My plan for next year is 2 properties / month and I already have it lined up through March.

Not everyone can do it the exact same way I do, but PM me for details on how I make it work if you're interested.
 

BigJimbo

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Vice said:
I'm in real estate, and let me tell you that when they say "no money down", they mean none of YOUR money down. The down payment is usually borrowed, usually from a bank, secured against something of value, or equity in another property.

As long as you still make money at the end of each month after expenses, you may have a good "no money down" deal.

I do love how skeptical and non-believing people get about this kind of stuff, it just makes it much easier when there's less competition.
At 20 years of age you can't even buy a beer in America. Yet, you are an expert on finance!
 

RazorAzoth

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Ok, but can you really make any money if you borrow your down payment?

So say you buy a 3 unit building and get a loan for your down payment. After you pay the loan, the mortgage, taxes, maybe you pay a property management company, etc....using the rent from the units, how would there by any cash left?
 

Alle_Gory

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RazorAzoth said:
Ok, but can you really make any money if you borrow your down payment?

So say you buy a 3 unit building and get a loan for your down payment. After you pay the loan, the mortgage, taxes, maybe you pay a property management company, etc....using the rent from the units, how would there by any cash left?
Interest is usually tax deductible if for the purpose of producing income.
 

Vice

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BigJimbo said:
At 20 years of age you can't even buy a beer in America. Yet, you are an expert on finance!
I never made any claim to be an "expert". The "teenage boys" you often refer to in your useless posts become "experts" after getting guidance from wealthy people who have done it before.

So tell me BigJimbo, are you finally acknowledging that I'm 20, or am I still a "teenage boy", like in this earlier post:

BigJimbo said:
15 year olds hyping real estate in 2010? Geez, doesn't surprise me. I hate to be the voice of reason, but NONE of you will ever make a fortune in real estate. Most of you will end up divorced though:up:
Then again, most of your posts are useless. I wish there was a way to block you so I wouldn't have to ask you to shut the f*ck up for a year or two.
 

Vice

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RazorAzoth said:
Ok, but can you really make any money if you borrow your down payment?

So say you buy a 3 unit building and get a loan for your down payment. After you pay the loan, the mortgage, taxes, maybe you pay a property management company, etc....using the rent from the units, how would there by any cash left?
It really depends on the deal; you've got to do your due diligence. Sometimes after all expenses you will have positive or negative cash flow, but remember that once the down payment loan is paid off, you'll start getting more cash flow if you've done everything right.

I know of some investors that are so well off that they can handle a property having negative cash flow for a while until the down payment is paid off and it goes back in the green, and buy it for selling it down the road for capital gain.

I STRONGLY recommend you finding a local real estate investors group and finding a mentor if you're interested in this highly lucrative business.
 

BigJimbo

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Vice said:
I never made any claim to be an "expert". The "teenage boys" you often refer to in your useless posts become "experts" after getting guidance from wealthy people who have done it before.

So tell me BigJimbo, are you finally acknowledging that I'm 20, or am I still a "teenage boy", like in this earlier post:



Then again, most of your posts are useless. I wish there was a way to block you so I wouldn't have to ask you to shut the f*ck up for a year or two.
http://www.youtube.com/watch?v=K853GykeGH0
There you go. He is even Far Eastern! Wow. You should have grown up in the 80's. TV was FILLED with real estate "guides". If you were a bit older you would know this. Go buy a beer...uh a Coke...and enjoy!!!


Real Estate with no money down was always a way to suck in the poor. Usually immigrant types. Notice how EVERYONE in that video speaks accented English. Nobody believes it anymore. Those who are older than 20 found out that NOBODY made it off of those courses!

Where is old Tommy these days? Real Estate? Are you crazy? That was so 1985! Tommy is now pimping social networking sites when he isn't playing poker.
http://www.youtube.com/watch?v=sFphkiIk2CU&feature=related
 

OzyBoy

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When i buy my own place (prob. next 4-5 years) there is going to be a BIG deposit so the mortgage is fairly small and easy to service. I just think it would be stupid to go in without a deposit (at least here anyway). :p
 

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Alle_Gory

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Vice said:
I know of some investors that are so well off that they can handle a property having negative cash flow for a while until the down payment is paid off and it goes back in the green, and buy it for selling it down the road for capital gain.
These investors have large cash reserves on hand just for that. If you're small time and just starting out, something like this will bankrupt you.

In real estate, you need money to make money.
 

strong like bull

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if you think there are no ways to buy real estate "no money down," youre right. there arent.

if you think there are ways to buy real estate "no money down," youre right. there are.

see?

for every person who lets fear or lack of knowledge stop them from doing something, another person is raising the bar and accomplishing something by being unconventional and relentless.

which would you rather be?

it doesnt matter how many people ramble on about what "cant" work. people are proving it works right now!

-slb
 

Alle_Gory

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strong like bull said:
it doesnt matter how many people ramble on about what "cant" work. people are proving it works right now!

-slb
Please provide evidence from someone credible. Someone who isn't pushing a 'how to flip real estate' seminar.
 

OzyBoy

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They need people to get in without a deposit to keep the ponzi scheme - sorry, i mean real estate industry going. :D :up:
 

Stud

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I do not do any deals using this strategy, but do some research on "subject to" deals.

My primitive understanding indicates this is where the "no money down" deals are.
 
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