No-Money-Down and Lease-Option Real Estate Investment Schemes
You've seen the real estate guru advertisements for books, DVDs, programs, seminars and mentoring promoting no-money-down deals. Perhaps you've watched the infomercial on TV with the people telling their stories of how they made millions investing in real estate for no-money-down.
Maybe you, like me and many others, have purchased books or expensive systems based on the no-money-down and lease-option investing schemes. Here's the rest of the story.
Perhaps you've seen an ad in your local newspaper offering a home with 100% financing from the seller or a lease option. You should know that the investor offering these types of deals makes money by purchasing the property at a discount and selling the property for an inflated price.
Lease-option investors play the odds. They know that most people won't be in a position to purchase the lease-option home in a year. So the investor gets some hopeful tenant to make higher than average rental payments, pay larger move-in cash, and make their mortgage payment for them. Those tenants who do eventually purchase the home paid much more for the home than the investor. Either way, the real estate investor makes money.
First-Time Home Buyers
If you need to buy your first home to live in, these home-purchase methods may help you if you have terrible credit and can clean it up in time to finalize the purchase. Just understand that you're paying too much for the property and may not make any money on appreciation. On the other hand, if you have strong credit, you can purchase a bargain house with no money down legitimately.
Beginning Real Estate Investors
Don't buy overpriced property! Avoid 100% investor-financed "deals." You will have to wait too long to make any money. Plus, the rental income most likely won't come close to making the mortgage payment for you.
Don't waste your money buying real estate guru advertisements for books, DVDs, programs, seminars and mentoring promoting no-money-down deals, The no-money down schemes tell you to look for home sellers in distress who will let you buy their home for no-money down with the seller financing the property for you. This system worked last century. Today's home sellers know that they can get a buyer who can get their own financing. Plus, they know that other home sellers have lost money selling with no-money down. They've heard the stories where home sellers didn't get paid and had to foreclose on a property. They've heard the stories where the investor-buyer rented the house to tenants who trashed the property. They've heard the stories where the investor-buyer collected the rent and didn't pay the home seller.
To get started investing in real estate:
1. Get your credit set for mortgage financing. (Mortgage credit differs from consumer credit.)
2. Buy right.
You can buy investment property for little - or even no-money down. Get started by buying your home or a second home.
Copyright © 2005 Jeanette J. Fisher All rights reserved.
Jeanette Fisher is the author of "Credit Help! Get the Credit You Need to Buy Real Estate," and other books. Real estate financing questions? Visit the new Real Estate Credit Help Center for articles, Credit Tips ezine, and blog.The Truth about Flipping Houses
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