By Julie A Broad
I'm not a big fan of no money down deals. After being a part of a handful of very rough deals done with little to no money down I've come to realize a harsh reality: no money down doesn't mean it won't cost you.
I tend to avoid no money down deals unless they are in good areas and have great potential. I avoid them, with one exception. This exception is partnering with burnt out landlords or real estate investors that just don't want to deal with the hassles of managing their properties anymore.
One deal we did recently was with a retired couple that wants to spend most of the winter traveling in warmer climates. My husband Dave had met them at a real estate investors club meeting. A few weeks later the fellow contacted Dave and asked to meet. At that meeting he started telling Dave about the properties they owned and about how they had this one that they were trying to sell because they didn't want to deal with tenants in this property.
The market had slowed and they weren't able to sell it without losing money.
Dave offered a simple solution to the issue they were facing. We'd become joint venture partners with them on the property as though we had just purchased the place today (at it's market value not at the higher price they were trying to sell it for). We take over managing the property and from today forward we'd be partners.
Basically with an appraisal and a joint venture agreement we had a deal. They leave their existing financing in place and we become 50%/50% partners on the property going forward.
We put the property into our rent to own program. We spent less than $400 to appraise the property and market it to potential tenant buyers and now we're now making about $200 per month for us and $200 per month for our partners and we pocketed $3,500 as our half of the deposit fee. Maybe that isn't big money but when we sell the property at the end of the lease term we'll make another $10,000 or so from the sale of the property. In total we should make a little over $15,000 from this deal if it goes as planned and all it cost us was some time and $400.
We are now part owners in a great property and it cost us $400 - $400 that we got back within a few weeks when we signed up the tenant buyer.
So if you're anxious to get into real estate or expand your portfolio but you don't have money you won't hear me recommending you chase a bunch of no money down type deals, but I will encourage you to start looking for other ways to solve the problems you face. Start attending your local real estate investing club meetings (that's where we met this particular investor) or calling for rent signs in the area. I can almost guarantee you won't have to look too hard to find a burnt out landlord or fellow real estate investor that would love to share the burden of their rental property with someone that has some time and energy to tackle the challenge! And if you do - you probably won't have to worry about financing or funding the deal.
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Article Source: My Favourite No Money Down Deals
