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Buying Property with Little or No Money Down

Part 1

Getting Started

Most real estate courses and seminars agree on what a person should do before jumping into the real estate market.

Make A Commitment

I can't emphasize this principle enough. It's the glue that holds the model together. Without a solid commitment, all the good information in the world won't get you property. In any worth-while endeavor there are always going to be obstacles. Commitment is the vehicle we use to overcome them. A determined person with immovable commitment is an awesome force. Sam Walton had several business set backs before Wal-Mart. It wasn't Sam Walton who built Wal-Mart. It was Sam Walton with immovable commitment that persevered in the end and the result was Wal-Mart.

Commitment, commitment, commitment. Say it over and over to yourself until it oozes from your pours. It will drive you to your goals.


I don't believe setting goals creates a magic, mysterious phenomenon. Rather setting goals gives focus and direction to energy. If people who fail to plan, plan to fail, then it is safe to assume that people who don't set goals arrive at a place not of their own choosing. Setting goals is the one thing we can do to chart a course of our own choosing rather than leaving our boat to the ever changing currents of life.

Commitment is the force and goals are the maps. Most successful people will tell you to 1) write your goals down and 2) have realistic short term and long term goals as well. And be flexible. Don't set yourself up for disappointment by not pacing your run. If you're in for the long haul, don't run like a sprinter. You'll ware out before too long.


That Credit Thing

Everybody's favorite subject, huh? Well let me first say that you do not need credit to buy real estate, but it makes it easier if you do. However, if you currently have bad credit or no credit at all, you can still buy a home or investment property. To facilitate building a good credit record, we've included with this package our credit repair info pack that explains in detail a step-by-step procedure that is a sure fired method that has worked for millions of others rebuilding their credit. If your credit report could use some improvement, I would encourage you to it check it out.

The important thing to remember if you're buying a home for little or no money down is that it has more to do with the deal and personal compatibility than it does with credit. We'll get into this in some detail later on.


What Kind of Property is Best for Investment

The property one chooses to buy should be determined by ones short and long term goals. Are you looking for income property, meaning property that will produce a residual income over an extended period of time, short term investment property, property that is turned over as quickly as possible with maximum profits, property that realizes its greatest gain down the line, a nice home to live in or any combination of all these options. These questions should first be answered before you set out on your property quest.


There's good news and bad news here. the good news is there's good money to be made in rental property. The bad news is you have to deal with renters. I'm being fictitious.

Ninety percent of all problems that occur with bad renters can be eliminated with common sense and a good screening process that should be religiously adhered to. Do your work up front and save yourself a bucket of trouble later on. Lower your defenses and I guarantee there will be people who will take advantage of you.

All income property should be balanced out against the potential benefits, i.e. income and resale value against the challenges such as the cost of repairs and maintenance as well as the responsibilities of being a land lord.

Income properties come in all sorts of colors and flavors:

  • Apartments
  • Retail Stores
  • Warehouses
  • Mobil homes
  • Office buildings

I could probably list 50 more but you get the point. Anything you own and somebody else rents from you for a profit would qualify.

For a new investor a single family residence represents the best investment opportunities. They are easier to buy and there's more of them. Besides, the most flexible sellers fall into this category. It's also considerably easier to evaluate the investment potential of a single family residence than commercial real estate, and they are much easier to rent and keep rented. Until a person solidifies his or her position in real estate investment, it just makes good sense to minimize the risk factor. This is most easily accomplished by investing in a single family residence.

Flexible Sellers

If you want or need to buy a property with little or no money down, there's little doubt that you have to find a flexible seller. This doesn't always have to be an individual though. HUD sells repossessed homes for as little as 3% down and in some cases less than that. Links to this information on HUD, VA and other government agency sales with their various restrictions conditions can be found at the end of this document.

To eliminate frustration and save a whole lot of time and effort, you need to be aware of a very important fact. At least 80% to 85% of sellers are firm on their asking prices and terms. These are NOT the people we want to deal with. It's the other 15% to 20% of the marketplace where the best deals are being made.

That is where you find the folks who really want to unload their property and are willing to negotiate on price or terms or both.

"Why would they do that?" you ask? The answers to that question is as varied as people themselves, but often it is a result of:

  • Divorce
  • Job transfer
  • Emotional dissatisfaction with the property
  • Need money fast
  • Tenant problems

Need I go on? But don't get the wrong impression, flexible sellers are not always down and out. Many times they would be considered wealthy by most people's standards.

The National Association of Realtors lists "Wanted tax or investment advantages" and "Needed larger home" as the two leading reasons why people move. Another thing to keep in mind is that a seller's emotions, needs, wants and desires are constantly changing. This can make a non-flexible seller become flexible, a not so uncommon occurrence of people who have sat on their "for sale" property for some time.

As you look into buying property with little or no money down, you will learn that it is essentially a numbers game. Or as they used to tell me in sales training, "You throw enough mud at the wall and some of it is going to stick." If you talk to one person and they say "no" and you give up, you haven't tried enough. Talk to 20 prospective flexible sellers and you'll probably get several workable deals. It's very important to remember that your success is greatly effected by the number of offers you put out. There's no room for discouragement in this game. Emotions must take a back seat to logic and persistence.

Studies have shown that two out of three people are either going to buy, sell or lease real estate or know someone who is. It's a very active arena and the most persistent are the most successful.

One of the gurus of the industry puts it like this:

  • Call twenty-five sellers
  • Look at five properties
  • Make three offers
  • Buy one property

And he is speaking from the personal experience of many others besides himself.

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