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You've seen the real estate investment guru advertisements for books, DVDs,
programs, seminars, and mentoring coaches promoting no-money-down deals. Perhaps you've
watched the infomercial on TV with the people telling their stories of how they made
millions in a real estate investment with no-money-down and cash back to the
buyers.
Maybe you, like me and many others, have purchased books or expensive systems based on these
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 real estate investment play the odds. They bet that most people won't be in a position
to purchase the lease-option home in a year. So the investor seeks a hopeful tenant to make higher
than average rental payments, pay more move-in cash, and make the investor's mortgage
payment.
Those tenants who do eventually purchase
the home paid much more for the home than the investor. Many tenants never come up with a new
mortgage loan to purchase the property when the time runs out. 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 in a
year. 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.
Tips for Beginning Real Estate Investment
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 books, DVDs, programs, seminars and mentor-coach
promoting no-money-down deals. Would you buy a book on how to make a fortune on the Internet that
was written in 1995?
These out-of-date, no-money down schemes, tell you to look for home sellers in distress who will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, today's home sellers know that other 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 building wealth in real estate today:
1. Get your credit ready for mortgage financing. (Mortgage credit differs from consumer
credit.)
2. Buy right. Don't overpay for deals that sound too good to be true. These schemes are too good to
be true!
3. Guard your money. Don't get yourself in over your head with high mortgages on rental properties
that cause you negative cash flow and jeopardize your financial well-being. The best way to do this
is to make sure you get the best mortgage rates on a bargain-priced property.
You can buy investment property for little -- or even no-money down. Get started by buying your
home or a second home. Real estate investing offers you the most tried and true way to build wealth
when you avoid investing schemes.
Copyright © 2005 Jeanette J. Fisher. All rights reserved.
About the author:
Jeanette Fisher teaches beginning real estate investors five easy steps to find,
finance and fix houses for profits. Free ebook on fixing houses using interior design
strategies for top-dollar sales, http://www.doghousetodollhouse.com/
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