Homes For Rent - Purchasing property With No Money Down: My Personal touch
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Purchasing property With No Money Down: My Personal touch
Have you ever seen those infomercials about buying houses with "No Money Down?" They are indeed well done. They have all kinds of habitancy offering great testimonials about how they have gotten rich, buying rental properties, with indeed no money out of their pocket. You see this guy, standing on a street corner, talking to someone, and he says, "I own that one," pointing to a beautiful colonial. "I also own that one next to it, and the one two doors down, and I'll be end on the one directly over the street from it, next week." He then assures us that he has purchased 17 homes in the last eight or ten months, with zero money down on the properties. Plus, in many cases he's also paid no end costs.
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And, let's not forget, this same guy is grossing tens of thousands of dollars monthly, and his net worth is nearly one million dollars. So, he says.
Now, all of this looks wonderful, so when the man selling the policy that will teach you how to do this, at a nifty price of just 7.00, speaks, you are glued to his every word. "Real estate is the safest and fastest way to make money, today," the scholar will tell you.
So, can this indeed be done? Can you buy houses with no money down? Can you come to be a landlord in as puny as one month's time and start raking in the cash from those rent payments? The talk is an absolute "Yes." It can be done, and I am proof positive, because I've done it. The query you should be asking yourself is not can I buy real estate with no money down, but should I?
You see, this is a query that the guy selling the No Money Down course, with all of his habitancy and their great testimonials hopes you never ask. His advertising and marketing strategy would collapse, if he gave whatever a opening to ask this question, because he would be forced to lie if he answered it.
Rarely is the whole truth everywhere to 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 any child could deal with it. It makes it seem like every American should be doing it, and we'd all be millionaires. But every American is not doing it, and many of the ones who are doing it not only are not getting rich, they are indeed going broke. The infomercial won't tell you this. That's why I'm here.
The Truth
Now, let's get started with the truth about buying real estate with no money down and the truth about being a landlord. The first thing you need to know is that they are both very bad ideas. Let me justify by using my own contact in these areas. I started buying rental property nearly 10 years ago. The first property I bought was a deal orchestrated by some real estate con artist, who told me I needed just ,000 to take possession of this home and, in the process, help out a woman who was about to be foreclosed upon.
In two years, she would clean up her credit, refinance the loan on the house, and I would make ,000. Sounded good to man who was quick to buy into whatever that returned big dollars in a short time.
This worked for the first year, as the woman paid on time, and I pocketed an extra 0 monthly. Later, though, things began to collapse, as the house began to need repairs, all of which the woman couldn't afford, so I had to pay for them. I put nearly ,000 into the house in a four-year period. When I was ultimately able to sell it, I didn't quite make back what I had put into it.
Meanwhile, I was eager to overcome this problem by adding many more. A slick mortgage broker got hooked up with an even slicker real estate prospector, and the two of them convinced me that they had a way I could buy houses rapidly, with indeed no money out of my pocket. Although my contact will probably be sufficient to enlighten you to the pitfalls of this model and of being a landlord, let me say that I can't emphasize sufficient how perilous buying property with no money down is.
In six months time, I had purchased eight houses - many with loans from the same wholesale lender. These lenders should have been implicated with all of the debt I was building, but they kept approving loans, based on my good prestige and rents face the mortgage payments. One of the biggest problems, which I was not experienced sufficient to detect, was that most of the rents were just to 0 above the mortgage payment.
"Don't worry," the investor/ hustler would say. "You'll make all your money on volume. We'll get you into 30 or 40 houses, and you'll be pocketing ,000 to ,000 every month."
As you might imagine, my mind raced. I was development the huge deposits at that very moment. My bank account was fattening up at breakneck speed.
The Illusion
This is what habitancy who buy houses, using the No Money Down plan envision happening. After all, if you can buy one house with no money down, why not five or ten or fifty? For some intuit - the foresight of the dollar sign, most likely - I failed to seriously consider the maintenance of these houses, the possibility of missed rent payments, and the opening that renters might indeed stop paying, altogether, forcing me to evict them - a time-consuming and extremely precious undertaking.
As you may have 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 man failed to pay rent, I could cover it with the nine other payments. But when two, three and sometimes even five tenants didn't pay in the same month, it was devastating to my business. I had to go to my enterprise account and pay up to ,000 at a time in mortgage payments, with no income to cover it. Plus, I had to pay a property administration enterprise to get my tenants to pay or to evict them.
Soon, this became the norm, not the exception. There were constant problems at my houses. Unhappy tenants led to poor upkeep of the property and even more maintenance problems. About one year, after I had amassed 26 houses, I was having problems with almost 10-15 houses and/or tenants each week. I was evicting at least two tenants each month, and almost four to seven tenants were whether behind on rent or not paying at all. Promises were made, payment plans arranged and few, if any, ever followed through.
It didn't take long for me to realize that this was no way to make money in real estate. Consequently, I got rid of these houses as fast as I perhaps could. There were plenty of buyers, willing to take over my headaches, because they had the ability to make it work, they believed.
In 10 years of being a landlord, I lost thousands of dollars and likely took some years away from my life with all the stress I had endured. So, whatever you do, avoid the No Money Down Trap. There are much better, still uncostly ways to make money in real estate.
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