Nothing in the last thirty years has excited the would-be real
estate consumer as much as "no money down," " no down payment,"
real estate investing for which we all have to thank Carleton
Sheets. Then along comes Ron Le Grand offering "cash back" at
every closing! Can either be true?
Most people don't believe either claim. Yet, ever year thousands
invest hundreds of dollars in Sheets' program and potentially
thousands in Le Grand's. So what is the answer? Are the claims
true?
Like a politician my answer depends on whom I talking to. Some
people will positively be able to buy real estate with "no money
down," "no down payment," they're the ones with money for
closing cost. For most dreamers with no money in their pocket or
the bank the answer is a definite no! A wise man once said "it
takes money to make money" that's almost always true!
In real estate as in life there a few absolutes, you noticed my
hedge words "most" and "almost," but there is more than one way
to hedge your words. When reading the ads or listening to the TV
real estate gurus you heard "NO MONEY" but they say is "no money
down," "no down payment." There are lots of ways to buy real
estate with "no down payment" but only a few to buy with no
money.
So if you are asking is what the TV gurus say true? The answer
is a definite, absolutely, positive, yes! If on the other hand,
you are asking is what I heard true? Just how naive can you be?
I bet you still believe in Santa Clause and the Easter Bunny!
The answer is definitely, absolutely, positively, no!
Non-owner Occupied lenders normally require the investor to at
least pay his closing cost. 100% seller financing is going to
have some closing cost! Most states picked up the deed stamp tax
when the Fed. dropped it! Here in Nevada a $200,000.00 deed will
require $510.00 tax plus $7.50 / page just to record. So even
the most simple "deed subject to the existing mortgage" with "no
money down," "no down payment," is going to take several hundred
dollars to close.
Most real estate gurus, myself included teach buying distressed
properties, which is really a misnomer, we mean buying from
distressed sellers! Distressed sellers seldom (another hedge
word) have the ability to pay you! There are legal ways to
borrow cash out on N/O/O purchases, I write about the best one
in chapter 1 of my book "One House At A Time / Finding and
Buying Single Family Rentals." The key word is "legal" there are
many people preaching fraud, don't get involved. Why invest just
to pay a defense attorney?
What about the claim "cash back at every closing?" I've been in
lending and real estate since 1969. I've been a hands-on real
estate investment consultant since 1973. I write about and teach
real estate investment. I write about getting cash out in "One
House At A Time / Finding and Buying Single Family Rentals," but
I couldn't promise cash out at every closing! But, it's true! I
ask the man himself. I stood up, I had him, an undeniable lie!
Asked how can you promise cash out at every closing? He looked
me straight in the eye, as sure of himself as I was sure I had
him, and said, we teach that if you can't get cash back don't
close. I settled back into my chair and consider sliding under
the table. It's true, you can get cash back at every closing!
Only my wife to my right and one of my students to my left
realist how many good deals that advice would kill.
The question was, are the real estate gurus claims, true or
false? My answer is, yes! I've been in the business for nearly
35 years, and except for the puffery I believe them. I question
the morality of the approach of many programs. I doubt that most
people will get much out of the programs. I question the value
of the programs, several total over $30,000.00, but one good
deal could cover that several times. I write about a more people
friendly approach at a reasonable price. But, for me the answer
is I believe them.
About the author:
William J Archambault, Jr has been in lending and real estate
since 1969. A mortgage broker in Las Vegas, NV He writes about
up to the minute real estate, tempered with the wisdom of our
grandfathers. He is the author of "One House At A Time / Finding
And Buying Single Family Rentals" available at
http://www.reii.org Counting On Your Fingers" and "There Is
Always More Than One Way" e-mail: wja@reii.org
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