Buy Property
With 'Nothing Down'
Buying property with nothing down sounds extremely enticing, especially if you have no money to put down, which is often the case.
The truth and feet-on-the-ground reality of buying property with nothing down techniques is far different from much of the gloss and hype seen in home business adverts or seminars.
In A Nutshell:
- Largely dependant on your ability as a negotiator
- Requires a means of lead generation for motivated sellers
- There are a few techniques that can be used if the elements above are squared away
This fits in with the mantra of using OPM (Other People’s Money), however in the UK there has been much abuse over recent years with false valuations, cashbacks, gifted deposits etc, mortgage companies have rightly been concerned and changed policies accordingly.
This is due in part to the effect that it encourages people with little money management or cash flow to buy and then get into trouble with repayments.
Nothing down needs 3 elements in order to work effectively:
1. Motivated-seller lead source
2. A capable practitioner
3. Creative finance techniques
There are interesting but pricey courses in excess of £1000 ($2000), as in all cases it is not so much the information but the individual. None of these courses or seminars were value for money.
The fundamentals are simple enough: market research, location of motivated sellers, negotiations, and structure of a positive cash flow.
Motivated-Seller Lead Source
Having a sufficient number of suitable properties to look at is centred around developing a lead generation system. This can take the form of contact networks, or a system to find them.
If you want motivated sellers to find you then you need to be creative. A motivated seller wants to sell their house quickly.
If you can offer a product or service (such as a free ebook or article on 'How To Sell Your House Quickly' etc) that helps them with this problem they will probably act on it.
During this process you should be able to extract their contact details as well as having made an initial good impression.
For a tactical tool on how to achieve this as well as a case studies click here.
Negotiating
This requires a level of expertise and diligence that will only suit individuals of the right character and intellect. This could be useful for a dynamic creative, gutsy driven Worker.
Sales skills and temperament are also needed to convince the recipient to part with their property for less outright money. Are you any good at bargaining?
You can certainly learn negotiating techniques but Workers are born the best at the 'art of the deal'. If this is not your temperament you may want to find a partner or pay someone who is a hard negotiator.
Financial structure of a nothing down deal
Pros
- Theoretical minimal risk
- If housing cycle is right massive gains possible
- Option agreements can bypass bad credit/no cash problems
Cons
- Requires skill and nerve
- Need a decent lead source
- Highly competitive market
- Attention to detail needs to be paid to yields and cash flow
Recommendations
Dynamic individuals, especially closed temperaments and the Worker in particular, are likely to be more effective with this principle.
|
