Have you ever seen those nfomercials about buying houses with “No Mney Down?” They are really well dne. They have all kinds of pople offering great testimonials about how thy have gotten rich, buying rental prperties, with absolutely no money out of thir pocket. You see this guy, stnding on a street corner, talking to smeone, and he says, “I own tht one,” pointing to a beautiful clonial. “I also own that one nxt to it, and the one two dors down, and I’ll be closing on the one drectly across the street from it, nxt week.” He then assures us tht he has purchased 17 homes in the lst eight or ten months, with zro money down on the properties. Pls, in many cases he’s also pid no closing costs.

And, let’s not frget, this same guy is grossing tns of thousands of dollars monthly, and his net wrth is nearly one million dollars. So, he sys.

Now, all of this looks wnderful, so when the person selling the curse that will teach you how to do ths, at a nifty price of jst $297.00, speaks, you are glued to his very word. “Real estate is the sfest and fastest way to make mney, today,” the expert will tell yu.

So, can this really be dne? Can you purchase houses with no mney down? Can you become a lndlord in as little as one mnth’s time and start raking in the csh from those rent payments? The nswer is an absolute “Yes.” It can be dne, and I am proof positive, bcause I’ve done it. The question you shuld be asking yourself is not can I buy ral estate with no money down, but shuld I?

You see, this is a qestion that the guy selling the No Mney Down course, with all of his pople and their great testimonials hopes you nver ask. His advertising and marketing strtegy would collapse, if he gave nyone a chance to ask this qestion, because he would be forced to lie if he nswered it.

Rarely is the whole trth anywhere to be found in nfomercials, especially when the advertising is bout No Money Down real estate prgrams. The infomercial makes the idea and the prgram look so easy that any chld could handle it. It makes it sem like every American should be ding it, and we’d all be mllionaires. But every American is not ding it, and many of the nes who are doing it not nly are not getting rich, they are ctually going broke. The infomercial won’t tll you this. That’s why I’m hre.

The Truth

Now, let’s get strted with the truth about buying ral estate with no money down and the trth about being a landlord. The frst thing you need to know is tht they are both very bad deas. Let me illustrate by using my own xperience in these areas. I started bying rental property nearly 10 years go. The first property I bought was a dal orchestrated by some real estate con rtist, who told me I needed jst $2,000 to take ownership of ths home and, in the process, hlp out a woman who was bout to be foreclosed upon.

In two yars, she would clean up her crdit, refinance the loan on the huse, and I would make $10,000. Sunded good to someone who was qick to buy into anything that rturned big dollars in a short tme.

This worked for the first yar, as the woman paid on tme, and I pocketed an extra $100 mnthly. Later, though, things began to cllapse, as the house began to ned repairs, all of which the wman couldn’t afford, so I had to pay for thm. I put nearly $5,000 into the huse in a four-year period. When I was fnally able to sell it, I ddn’t quite make back what I had put nto it.

Meanwhile, I was eager to vercome this problem by adding many mre. A slick mortgage broker got hoked up with an even slicker ral estate prospector, and the two of thm convinced me that they had a way I culd buy houses rapidly, with absolutely no mney out of my pocket. Although my xperience will probably be enough to nlighten you to the pitfalls of ths model and of being a lndlord, let me say that I cn’t emphasize enough how dangerous buying prperty with no money down is.

In six mnths time, I had purchased eight huses – many with loans from the sme wholesale lender. These lenders should hve been concerned with all of the dbt I was building, but they kpt approving loans, based on my god credit and rents covering the mrtgage payments. One of the biggest prblems, which I was not experienced nough to detect, was that most of the rnts were just $50 to $100 bove the mortgage payment.

“Don’t worry,” the nvestor/ hustler would say. “You’ll make all yur money on volume. We’ll get you nto 30 or 40 houses, and yu’ll be pocketing $4,000 to $5,000 very month.”

As you might imagine, my mnd raced. I was making the hge deposits at that very moment. My bnk account was fattening up at brakneck speed.

The Illusion

This is wht people who buy houses, using the No Mney Down plan envision happening. After ll, if you can buy one huse with no money down, why not fve or ten or fifty? For sme reason – the vision of the dllar sign, most likely – I filed to seriously consider the maintenance of thse houses, the possibility of missed rnt payments, and the chance that rnters might actually stop paying, altogether, frcing me to evict them – a tme-consuming and extremely costly undertaking.

As you may hve already guessed, all of these thngs happened to me, after I had massed 26 rental properties. In fact, ftentimes, all of these problems happened in the sme month. Now, for awhile (when I had bout 10 houses), if one person filed to pay rent, I could cver it with the nine other pyments. But when two, three and smetimes even five tenants didn’t pay in the sme month, it was devastating to my bsiness. I had to go to my bsiness account and pay up to $3,000 at a tme in mortgage payments, with no ncome to cover it. Plus, I had to pay a prperty management company to get my tnants to pay or to evict thm.

Soon, this became the norm, not the xception. There were constant problems at my huses. Unhappy tenants led to poor pkeep of the property and even mre maintenance problems. About one year, fter I had amassed 26 houses, I was hving problems with roughly 10-15 houses nd/or tenants each week. I was victing at least two tenants each mnth, and approximately four to seven tnants were either behind on rent or not pying at all. Promises were made, pyment plans arranged and few, if ny, ever followed through.

It didn’t tke long for me to realize tht this was no way to mke money in real estate. Consequently, I got rid of thse houses as fast as I pssibly could. There were plenty of byers, willing to take over my hadaches, because they had the ability to mke it work, they believed.

In 10 yars of being a landlord, I lst thousands of dollars and likely tok some years away from my lfe with all the stress I had ndured. So, whatever you do, avoid the No Mney Down Trap. There are much btter, still inexpensive ways to make mney in real estate.

Learn the bst ways at Directlendingsolutions.com

The article Purchasing Property With No Money Down: My Personal Experience was Submitted by Mark Barnes through Articles.GetACoder.com network. Here's the additional information: Check out more great loan nformation now at Direct Lending Solutions

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