No Money Down. A High Leveraged Financing Concept
One of the most unique aspects of real estate investing is the fact that you can purchase a property without putting any money or down payment. This is called no money down or nothing down by real estate investors.
It is also one of the investment strategies that cannot be used in any other investment vehicles, such as stocks. Can you buy stocks with nothing down?
Buying properties with little or no money is not as easy as most people think. But with the right mentoring from experienced mentors they can do very well with it. Today virtually every real estate mentors are willing to teach about no money techniques in books, audio programs and seminars.
There are many variations of no money down techniques that real estate investors can utilize. One of them is seller finance (or vendor finance). When a buyer wanted to buy a property without putting any down payment, he or she can negotiate for a vendor finance which is legal and acceptable.
But why would a seller willing to lend money to the buyer? After all, the seller just wanted to get rid of the property once and for all.
To answer the question, try to put yourself in the motivated seller's point of view. He is willing to dispose off the property at the first place. Imagine he found a willing buyer to his property. He sold it to the buyer with the condition he will fund a portion of the purchase price. He agreed and the deal is signed.
The property is sold and the proceeds is received by the seller which he uses a portion of it to fund the buyer's purchase. The buyer then pays the seller back in the form of monthly installments.
That is just a brief example of a typical vendor financing. Of course not all sellers are willing to agree to this term.
Other types of no money down include home equity loans, funding from partners, etc.
Probably the first book that touches on nothing down is Robert Allen's Nothing Down in the 90's. (the first edition is published way back in the 80's). It outlines everything about buying property with no money through other financing sources.
You can read the review of the book here
(the latest edition is called Nothing Down for the 2000s)
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