Heard of any No-money-down risks? - Posted by Ginger Harris

Posted by Jim on October 30, 2000 at 03:18:01:

There is always risk in investments. Even in a ‘No Money Down - 100% Owner Financed’ deal, there is a margin of risk (I’ll take ALL of these you can find). Using traditional financing and personally guaranteeing the mortgage(s) and/or note(s) puts your risk factor very HIGH. You have to weigh the “RISK/PROFIT” factor.

When making offers, I always look at the risk to calculate the amount of profit I NEED to make for the deal to work. I alway try to put myself in a ‘Hard to Loose’ situation when buying or selling.

Some of the “GURUs” do teach these techniques to help you to structure ‘offers to sellers’, so as to off set and/or minimize your risk.

Heard of any No-money-down risks? - Posted by Ginger Harris

Posted by Ginger Harris on October 29, 2000 at 18:05:55:

I bought over 20 units with no-money-down creative financing in Klamath Falls, OR. I later purchased CS’s program. Is anyone aware of what the infomercial gurus tell the consumer the risks and precautions of no-money-down creative financing might be? Has anyone thought about any potential risks or precautions? I would really be interested in hearing what all of you thought. Ginger Harris

Re: Heard of any No-money-down risks? - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on October 30, 2000 at 20:48:34:


There are a lot of possible risks. Each needs some attention, and a decision on a case by case basis.

The possibility of negative cash flow is always present, and sometimes is hidden. For instance it is possible to buy a property with no money down that will need major repair soon like a furnace or a roof. It is always important to look very carefully.

A property may be structurally unsound. Might not be safe or might not meet local codes. Things like this can cost a lot of money to fix, so check carefully.

The presence of lead based paint may be a very expensive problem in a no money down deal.

In the case of seller carry back, no money down it is possible that the seller is not the owner and can not deliver title when the time comes. This can happen in lease option deals, and other transactions as well. Any kind of defect in the title can be expensive and sometimes impossible to fix.

Bottom line is that there are risks, and it will be up to you to find them. There are many sellers who will be very happy to deceive the rich real estate investor (that is you). Be careful.