|
|
Purchasing Property With No Money Down: My Personal Experience
|
| Tuesday, December 23, 2008 |
Have you ever seen those infomercials about buying houses with "No Money Down?" They are really well done. They have all kinds of people offering testimonials about how they got rich, buying rental property, with absolutely no money in their pocket. You see this guy, standing on a street corner, talking to someone, and he said, "I own that one," pointing to a beautiful colonial. "I also own that one beside him, and one door, and I will be a fence in front of him next week. " He assures us that it has acquired 17 houses in the eight or ten months, with no money on the properties. Moreover, in many cases, it is also paid no closing costs.
And let us not forget, this guy is the increase of tens of thousands of dollars per month, and his net worth is nearly one million dollars. So, he says.
Now, everything seems wonderful, so when the person selling the course that will teach you how to do it at a nifty price of just $ 297.00, took the floor, you are glued to his every word. "Real estate is the safest and fastest way to make money today," the expert will tell you.
So, can this really be done? Can you buy houses with no money? Can you become an owner in less than a month's time and start raking in the cash of these rents? The answer is an absolute "Yes." It can be done, and I am the evidence, because I did. The question should be asked not to buy a property with no money, but should I?
You see, this is an issue that the guy selling the No Money Down course, with all its people and their stories of great hope that you never ask. Its strategy for advertising and marketing of the collapse, if someone has the opportunity to ask this question because it would have to lie if he answered.
It is rare that any truth to any location can be found in infomercials, especially when the advertising is about No Money Down real estate programs. The infomercial makes the idea and the program look so easy that every child can handle. It makes all Americans should do, and we'd all be millionaires. But all Americans is not to do so, and many who do, not only are not getting rich, they are really broke. The infomercial will not tell you that. That is why I am here.
The Truth
Now we will start with the truth about buying real estate with no money and the truth of being a landlord. The first thing you should know is that they are both very bad ideas. Let me illustrate with my own experience in these areas. I started buying rental property nearly 10 years. The first property I bought an agreement was orchestrated by real estate with the artist, who told me that I needed $ 2000 just to take possession of this house, and in the process, l aid to a woman who was about to be closed.
In two years, she cleaned his credit, refinancing loan on the house, and $ 10,000. Sounds good to someone who was quick to buy anything that big is back dollars in a short period of time.
This has worked for the first year, as the woman paid on time, and I pocketed an extra $ 100 per month. Later, however, things began to collapse, as the house began to need repairs, which the woman could not afford, so I had to pay. I put about $ 5000 in the home, in a period of four years. When I was finally able to sell, I did not quite do what I put into it.
Meanwhile, I was eager to overcome this problem by adding many more. A slick mortgage broker hooked to a slicker estate prospector, and two of them convinced me they have a way I can buy homes quickly, without any money in my pocket. Although my experience will probably be enough to illuminate the pitfalls of this model and be a landlord, let me say that I can not stress enough the danger of buying property with no money at the is.
In six months, I had purchased eight houses? with many loans from the same wholesale lender. These donors have been concerned with all the debt I was building, but they kept approving loans, based on my credit and rents covering the mortgage payments. One of the biggest problems that I was not experienced enough to detect, is that most of the rent is only $ 50 to $ 100 above the mortgage payment.
"Do not worry," the investor / Hustler say. "Do all your money on volume. We will in 30 or 40 houses, and you'll pocket $ 4,000 to $ 5,000 every month. "
As you can imagine, my mind raced. I was the huge deposits at this very moment. My bank account was fattening at a breakneck pace.
The illusion
This is what the people who buy houses, using the No Money Down plan envisage happening. After all, if you can buy a house with no money down, why not five or ten or fifty? For some reason? the vision of the dollar, the most likely? Je n'avais pas réussi à sérieusement envisager le maintien de ces maisons, la possibilité de manquer les loyers, et la chance que les locataires peuvent réellement cesser de payer, au total, m'obligeant à les expulser? time-consuming and extremely expensive.
In May, you have already guessed, all these things happened to me, having amassed 26 rental properties. In fact, often, all these problems occurred in the same month. Now, for some time (when I was about 10 houses), if a person fails to pay the rent, I could cover with the nine other payments. But when two, three and sometimes even five tenants did not pay the same month, it was devastating for my business. I had to go to my business account and pay up to $ 3000 in both mortgage payments without any income to cover it. Moreover, I had to pay a property management company to get my tenants to pay or to evict them.
Soon, it became the norm and not the exception. There were constant problems at my houses. Unhappy tenants led to poor maintenance of the property and more maintenance problems. Almost a year, having amassed 26 houses, I had problems with about 10-15 houses and / or tenants each week. I was the eviction of tenants of at least two months, and about four to seven tenants were either behind on rent or not paying at all. Promises were made, payment plans arranged and few, if any, always followed by.
It did not take me long to realize that this was not a way to make money in real estate. Therefore, I got rid of these houses as soon as I could. There were lots of buyers ready to take over my head, because they had the capacity to operate, they believed.
In 10 years of being a landlord, I lost thousands of dollars and probably a few years of my life with all the stress I had endured. So whatever you do, avoid the No Money Down Trap. There is a lot better, more inexpensive ways to make money in real estate.
Learn the best ways to www.winningthemortgagegame.com
Mark Barnes is the author of the rich capabilities of the system, the winner of Thursday mortgages and other books of real estate investment. It is also a suspense novelist, and his new novel, The League, will thrill fans of sport and excitement. Learn more about the richness of Mark-building system and get free rein to its home loan http://www.winningthemortgagegame.com. Learn more about the League and read an extract http://www.sportsnovels.com |
posted by neptunus @ 1:04 AM
 |
|
|
|
|
