Has Anyone Bought Real Estate With No Money Down?

[bushwacker]

Or any other type of creative financing?

[FreeHugeMovies]

Why on earth would you buy with no money down?

[Elli]

I still can't believe that's legal.

[After Shock Media]

Originally Posted by bushwacker

Or any other type of creative financing?

Technically yes and that would be my primary residence which includes two rentals on same property.

Owner was in financial trouble and facing a foreclosure. I paid them a small sum to sign the mortgage into my name and for moving expenses (under 15k) I then gained the house and two rentals for a mortgage of 769.72 per month. Everything needed work but that was ok. Owner did previously have over 30k in equity in the property so technically I pocketed a little over 15k at signing. I focused on the rentals (5-10k total for both) and had each semi remodeled and rented in under 6 months at 500.00 each. Now I had a positive cash flow before taxes of a little over 230.00 a month.

Have since paid off house, remodeled house and rentals again to much higher standard (well house still needs a new kitchen). Rentals now go for 750.00 and 675.00 each.

Recent appraisal put property well above 275k and would be a lot more if rentals were on foundations which I may do in a year or two.

[Vendzilla]

Vet load or VA loan

[DBS.US]

Originally Posted by FreeHugeMovies

Why on earth would you buy with no money down?

You are insane

[bushwacker]

Originally Posted by FreeHugeMovies

Why on earth would you buy with no money down?

Why not?

[bushwacker]

Originally Posted by After Shock Media

Technically yes and that would be my primary residence which includes two rentals on same property.

Owner was in financial trouble and facing a foreclosure. I paid them a small sum to sign the mortgage into my name and for moving expenses (under 15k) I then gained the house and two rentals for a mortgage of 769.72 per month. Everything needed work but that was ok. Owner did previously have over 30k in equity in the property so technically I pocketed a little over 15k at signing. I focused on the rentals (5-10k total for both) and had each semi remodeled and rented in under 6 months at 500.00 each. Now I had a positive cash flow before taxes of a little over 230.00 a month.

Have since paid off house, remodeled house and rentals again to much higher standard (well house still needs a new kitchen). Rentals now go for 750.00 and 675.00 each.

Recent appraisal put property well above 275k and would be a lot more if rentals were on foundations which I may do in a year or two.

Nicely done. I have a similar opportunity, owner is relocating to south carolina.

[V_RocKs]

Originally Posted by FreeHugeMovies

Why on earth would you buy with no money down?

So you can buy a property for $112,000 that is rat infested and moldy. Put $25,000 into it and then sell it for $175,000 2 weeks later.

$38,000 in two weeks?

The power of no money down.

[After Shock Media]

Originally Posted by bushwacker

Why not?

I will give a hint, it is not infomercial easy. They can be found and it is possible, I would just not base finding any real properties with it and have money available. specially now during this foreclosure crisis, it may take a bit of cash to get them out and make damn sure you can afford the mortgage they have and hopefully get it onto a fixed from an ARM. Though on flipside today you are often buying properties with a negative worth due to the drop in property values.

[slapass]

Originally Posted by bushwacker

Or any other type of creative financing?

plenty of times.

[Cyrano]

Originally Posted by Elli

I still can't believe that's legal.

Why should lenders be legally restricted from issuing such loans?

[bushwacker]

Originally Posted by After Shock Media

I will give a hint, it is not infomercial easy. They can be found and it is possible, I would just not base finding any real properties with it and have money available. specially now during this foreclosure crisis, it may take a bit of cash to get them out and make damn sure you can afford the mortgage they have and hopefully get it onto a fixed from an ARM. Though on flipside today you are often buying properties with a negative worth due to the drop in property values.

Very good points.

[HowlingWulf]

Yes. Yes I have.

[beemk]

i dont know about other areas, but now a days in michigan no money down is non-existant. no money down is the reason theres so many foreclosures. right now the prices in my area are dirt cheap because 2-4 years ago they were giving no money down loans to everyone and their brother with crappy credit, now theres more foreclosures than you could imagine.

[slapass]

Originally Posted by Cyrano

Why should lenders be legally restricted from issuing such loans?

I have gone the 100% bank loan route but it is not that easy for a first timer. Owner financing to some extent is usually the easier route.

[bushwacker]

Originally Posted by slapass

plenty of times.

Please share.

I've purchased 3 homes with no money down. There are stipulations though. On each purchase, I had to have 12 months worth of mortgage in my bank and I believe it cost me 1/2 a point. I've also gone no doc on my loans as well due to not wanting to have to bring hundreds of stubs, and explaining why they are all from porn companies. This cost me a point as well.

Why did I purchase with nothing down? Because my lender broke it down, and my monthly savings with 0 down vs. 5% down came to $50 a month. $16,250 down would take me 27.08 years to recoup with a $50 savings per month based on a $325,000 home value. I'd rather have a sum of money like that working for me in some other manner instead of saving as measly $50 a month.

If you're putting money down, it's best to go 20% down so that mortgage insurance isn't an issue. At least that would save you a few hundred a month.

[Sosa]

Around here banks won't do 0 down now. They want 20% for investment properties, but will try 10% for some people.

[slapass]

Originally Posted by bushwacker

Please share.

I bought a fourplex from HUD. Bank just gave me 100% loan plus fix up cost. I bought a duplex for 21k less then the loan so the owner wrote me a check at closing. I bought a duplex with 2k down. The rents and deposits covered the 2k.
Seond mtge on house to buy other house then refied and paid off second. Bought a house where realtor took his commision in payments. Sort of not that good really. Bought second duplex with 2k down see above. bought a 90 unit where a friend paid the down payment and I paid him back with a refi a year later.

Sums it up

[bushwacker]

Originally Posted by slapass

I bought a fourplex from HUD. Bank just gave me 100% loan plus fix up cost. I bought a duplex for 21k less then the loan so the owner wrote me a check at closing. I bought a duplex with 2k down. The rents and deposits covered the 2k.
Seond mtge on house to buy other house then refied and paid off second. Bought a house where realtor took his commision in payments. Sort of not that good really. Bought second duplex with 2k down see above. bought a 90 unit where a friend paid the down payment and I paid him back with a refi a year later.

Sums it up

Very interesting, thanks for posting.

[~Ray]

get the seller to carry a second mortgage to bring it up to 100% financing.

a. they get their selling price
b. they set the % rate
c. they get a pre-payment penalty if you refi early
d. it's tax write-off secured by real estate
e. house gets sold fast without the need of a realtor, only title company
f. seller raises price a little and covers closing cost. wham bam.

[FreeHugeMovies]

For a primary residence, if you don't have money to put down, you shouldn't be buying a home.

[candyflip]

I have, but the properties were EXTREMELY distressed. They were cheap, so there wasn't even any financing involved.

I lost a bid on a farm house, 8 acres and 5 barns last week that would have been purchased with no money out of my pocket. Again, a foreclosure that was extremely distressed.

[bushwacker]

Originally Posted by FreeHugeMovies

For a primary residence, if you don't have money to put down, you shouldn't be buying a home.

that wasn't the point of the thread, but thanks for your input.

[qxm]

no money down is always possible...the current real estate situation presents a favorable market for savvy investors that's fo sho......... I've seen several people getting on IOs and Negams for a month or two then turning around and selling the property for a nice profit.........It'll be interesting to see what kind of loan programs will survive this sub-prime correction though..... I guess No-Doc is out of the question, it'll mostly be stated however those who can prove their income hence go stated will have some nice opportunity once the market starts to come back up.........which I hope it'd be sooner rather than later....

[After Shock Media]

Originally Posted by qxm

no money down is always possible...the current real estate situation presents a favorable market for savvy investors that's fo sho......... I've seen several people getting on IOs and Negams for a month or two then turning around and selling the property for a nice profit.........It'll be interesting to see what kind of loan programs will survive this sub-prime correction though..... I guess No-Doc is out of the question, it'll mostly be stated however those who can prove their income hence go stated will have some nice opportunity once the market starts to come back up.........which I hope it'd be sooner rather than later....

Or like as an example if I desired I could use current equity and purchase several new or one family lived in but in foreclosure houses right this moment and if I shop around enough find a few that would be profitable as rental units if I refinanced then to a fixed.

[the Shemp]

always use OPM (other peoples money) when you can...

[slapass]

Originally Posted by FreeHugeMovies

For a primary residence, if you don't have money to put down, you shouldn't be buying a home.

That is just crazy talk. Seriously, what is the point of saying that? The person stills pays rent and if the two are equal isn't getting a home even if financed all the way out better?

[FreeHugeMovies]

Originally Posted by slapass

That is just crazy talk. Seriously, what is the point of saying that? The person stills pays rent and if the two are equal isn't getting a home even if financed all the way out better?

Do you know what the foreclosure ratio is for someone who doesn't put money down on buying property?

[The Dawg]

Originally Posted by slapass

That is just crazy talk. Seriously, what is the point of saying that? The person stills pays rent and if the two are equal isn't getting a home even if financed all the way out better?

Ill chime in:

The main reason for saying that is if you dont have the money to put down 5% (at least) of the asking price then that means you can not afford it. People think just because you can foot the initial mortgage amount that everything is all good. Well, you need some sort of safety net when dealing with your primary residence.

First timers without knowledge rarely factor in PMI, insurance and property tax (real killer). So yea, things are lovely at first, but if your income takes a hit you could be in trouble.

[Sosa]

Originally Posted by slapass

I bought a fourplex from HUD. Bank just gave me 100% loan plus fix up cost. I bought a duplex for 21k less then the loan so the owner wrote me a check at closing. I bought a duplex with 2k down. The rents and deposits covered the 2k.
Seond mtge on house to buy other house then refied and paid off second. Bought a house where realtor took his commision in payments. Sort of not that good really. Bought second duplex with 2k down see above. bought a 90 unit where a friend paid the down payment and I paid him back with a refi a year later.

Sums it up

90 unit? very nice! You still have that property? Sounds like you are doing pretty good in your real estate investments. Atleast getting in at a good cost.

[slapass]

Originally Posted by The Dawg

Ill chime in:

The main reason for saying that is if you dont have the money to put down 5% (at least) of the asking price then that means you can not afford it. People think just because you can foot the initial mortgage amount that everything is all good. Well, you need some sort of safety net when dealing with your primary residence.

First timers without knowledge rarely factor in PMI, insurance and property tax (real killer). So yea, things are lovely at first, but if your income takes a hit you could be in trouble.

Is this not true for someone who just put all of their money down for a down payment? The ability to save 5% of the price of the house shows some inherent qualities but not much. People tend to fight tooth and nail to keep the homestead and that is why historically we have a low foreclosure rates on owner occupied homes.

And Freeuhugemovies what is the foreclosure rate over lets say the last ten years or so on people with zero down and 5% down? I do know that VA loans were zero down and had very little foreclosure but maybe you have other stats?

[slapass]

Originally Posted by Sosa

90 unit? very nice! You still have that property? Sounds like you are doing pretty good in your real estate investments. Atleast getting in at a good cost.

Sold it for 2.5 times what I paid for after just three years. It was seriously better then sex. I do commercial now and it is one tenth the work with steady boring returns.

But I am now buying residential again and have picked up 7 houses in the last few months. Might be early but hard to tell. In one year I might look foolish but hopefully will be smart looking in 5.

[bushwacker]

Originally Posted by slapass

Sold it for 2.5 times what I paid for after just three years. It was seriously better then sex. I do commercial now and it is one tenth the work with steady boring returns.

But I am now buying residential again and have picked up 7 houses in the last few months. Might be early but hard to tell. In one year I might look foolish but hopefully will be smart looking in 5.

Do you only buy in areas near you?

[Sosa]

awesome man! We are still trying to pick up our first here in our local market. Looked at some but haven't found a decent enough one for our small college town of 5-6k people.

[kane]

In a way I did this this a few years back. Three friends of mine and I bought a house to flip. We bought the house from a bank. It was a foreclosure and they let us have with no money down and no payments for 90 days. We did have to deposit 6 months worth of payments into a savings account and couldn't touch them for 6 months as part of the deal - so that could be considered a down payment but it equaled out to about a 1% downpayment. We got the mortgage then put 30K of our own money into the house to fix it up. We did most of the work ourselves and got it done in around 2 months then had the house sold 2 months after that so all we ever had to make was one house payment.

This was before the massive interest rate lowering though and now where I live it is very hard to find these types of deals because big developers have started moving in and buying up these types of things, but I would guess there are still good deals like this out there if you are willing to look.

[slapass]

Originally Posted by bushwacker

Do you only buy in areas near you?

Well this is a case where age works in my favor. I bought houses in this area 20 years ago so I knew the market in a very very long term prospective so when the prices were the same as what I paid 20 years ago it was a no brainer. So yes same area. I did get one FL condo too. The condo was 50% off what others had sold for in the last year so hopefully that is safe too.

I am doing more market timing then picking and choosing the perfect deal so I think I am problably going to reap slightly less well then a more hands on approach.

[GTS Mark]

Originally Posted by the Shemp

always use OPM (other peoples money) when you can...

Yep excellent tip there shemp.

[beemk]

what are you doing with the properties slapass, renting them out?

[slapass]

that is the goal. Slow going on the rental side as we had to get painters and carpet done and I live 6k miles away from them. But yeah they are super cheap inner city stuff but not crap. 3br 1 bath houses. So I have a manager etc just need to get all the details in place for it pick up.

typical deal - bought 50k plus 5 k to fix up and now renting for 1k a month.

[latinasojourn]

yes, several, with either very little down (closing costs plus my commission, with OWC or private loans, a couple fully assumable)

20 yrs ago when i was a real estate broker.

tip, if you want maximum leverage get your state broker license, join the MLS, make tons of offers.

what folks don't understand is that RIGHT now there are many zero down deals (closing costs down) for gainfully employed people with average or better credit.

the trick is to find an agent who will take the time to show you those properties.

[latinasojourn]

Originally Posted by The Dawg

Ill chime in:



First timers without knowledge rarely factor in PMI, insurance and property tax (real killer). So yea, things are lovely at first, but if your income takes a hit you could be in trouble.

if you are in USA in high tax bracket you need to factor in the after tax impact.

in many cases for the single high income individual with no tax shelters buying the property he will live in will be MUCH CHEAPER than paying rent (even with very low down payment) because he can change his withholding to a very low amount.

[warlock5]

Even with top notch credit getting a no money down loan now is going to be very difficult, so-so credit, its not happening. We are in the middle of a massive credit crisis with bank losses heading towards half a trillion dollars... they aren't so eager to take on risk at the moment.

[latinasojourn]

Originally Posted by warlock5

Even with top notch credit getting a no money down loan now is going to be very difficult, so-so credit, its not happening. We are in the middle of a massive credit crisis with bank losses heading towards half a trillion dollars... they aren't so eager to take on risk at the moment.

true,

but you forget OWC, private loans, wraparounds, and assumables, contract for deed, etc.

lots of ways to skin the cat when you have desperate sellers.

[L-Pink]

Originally Posted by slapass

I do commercial now and it is one tenth the work with steady boring returns.

I do strictly commercial to established tenants. All are long term triple-net leases. One I haven't even driven past in 3 years. Rents are direct deposit, have regular increases. Talk about trouble free.

[L-Pink]

Originally Posted by latinasojourn

make tons of offers.

There is the key to getting a deal, getting turned down.

[rowan]

In Australia it's possible to get a 30 year 107% (or thereabouts) loan, which stacks fees such as stamp duty and mortgage insurance onto the initial loan value. It's marketed more at people who want to buy a home so in reality it's a pretty raw deal, if you do nothing your $20k worth of costs attracts interest for the next 30 years. Then again these are people who are refinancing 30 year loans to buy a plasma TV........

[slapass]

Originally Posted by L-Pink

I do strictly commercial to established tenants. All are long term triple-net leases. One I haven't even driven past in 3 years. Rents are direct deposit, have regular increases. Talk about trouble free.

same deal. Not true triple net and one that is smaller and people move in and out of but over all it is really hassle free.

We are not seeing rent increases(much) even though the cost of new construction is much higher then it was. I hope the system corrects a bit and we get some nice gains on the rent side.

[The Dawg]

Originally Posted by rowan

Then again these are people who are refinancing 30 year loans to buy a plasma TV........

True, its a shame but hey... its their debt.