Buying Property with Little or No Money Down Part 2

When focusing on buying property for little or no money down, it's easy to jump too quickly at any seller willing to deal. As a result mistakes are made, like overpaying, agreeing to too high of an interest rate or buying property that fails to increase in value.

For this reason it's important to evaluate the property on its own merits and from several different aspects.

Some questions to ask yourself when looking for prospective property are:

Is it located in a growing city?
How about the neighborhood?
Are there a lot of vacancies near by?
What are the price ranges of comparable properties in that area that are for sale?
Are businesses coming to or leaving the area.

All these questions will have a bearing on the future value of any property and should be examined carefully before an intelligent decision can be made.

As stated earlier, the single family residence offers the best opportunities for the average person entering the real estate market.

Most experts will tell you to never buy a two bedroom or less home. There are far too many people that need three or even four bedrooms. These homes are easier to sell and rent. It's also beneficial to have a garage, fenced in yard and central air conditioning, all popular features that make reselling or renting less difficult.

Fixer Upper

Fixer upper homes, especially in good neighborhoods, increase the opportunity for profit. In addition you'll find many of your flexible sellers with these kinds of properties.

A fixer upper property will sometimes languish on the market for months or even years creating a motivated seller open to creative financing. However a fixer upper should be examined closely to ensure no major renovation is required. Major renovation can put future profits at risk for obvious reasons although this is not always the case.

Buying Through Real Estate Brokers

When a property you're interested in is listed with a real estate broker, you are forced to make an offer through them. This presents some challenges that take a little finessing when offering no money down deals.

A real estate broker's first allegiance is to the seller but their primary concern is their commission. This is not bad but it must be factored in by your offer. There are several ways to do this with out actually having to put money down. However many brokers don't hear much of what you're saying when they perceive that you're trying to make a no down payment offer. It's important to remember that real estate brokers are required by law to present any offers made to the sellers and you have a right to be there at the time the offer is presented if you choose. If necessary, this should be stated to the broker in a non-offensive manner.

Once the broker understands how he or she can profit from your offer, the resistance will usually subside.

Buying From A Real Estate Broker

There are more and more brokers not only selling properties for other people but also buying them themselves. Why? To make a profit. If you structure a deal from which they can profit, they are more likely to go with it.

I bought a home from a real estate broker and it went as smooth as silk. I was dealing with a professional whose main objective was making a profit. He didn't get everything he wanted but it was enough to satisfy him. Today, three years after the deal, he still is offering me property that he thinks I might be interested in. That's because our previous transaction was a win-win deal for both of us.

Buying From An Owner

Buying from an owner without the real estate broker as a middle man has obvious benefits but also some hidden problems. Most of these problems can be dealt with by contracting the services of other professionals or by careful procedures.

Not having a real estate commission to pay eliminates an obvious hurdle to no money down deals but at the expense of loosing the valuable services of a professional. Therefore, much care and planning should go into dotting all the i's and crossing all the t's.

When you find a flexible seller who is not using a broker make sure you don't move too fast. This is easy to do if your inexperienced. Examine the property's market value, analyze the potential cash flow for rental property and choose the creative financing techniques that will determine the price range.

Part 1: Getting Started

Part 3: Buying Property with Little or No Money Down