Purchasing property without using your own capital is not difficult as long as you are open to learning different techniques and strategies.
Typically, the easiest property to buy no money down is the one which has been on the market for a long term. Long term here would mean several months – anywhere from 3 months upwards. Generally, the longer the period of time a property has been on the market for, the more motivated the seller becomes. Hence, it becomes easier to negotiate a lower price and get a good deal.
In today’s (buyers) market there are ample below market value property deals available. Although the market has improved since this time last year, a lot of people are still finding it difficult to sell their houses and are thus having to reduce their prices, in some cases considerably.
When negotiating with the vendor of a below market value property, the buyer should prove to the property owner that he has sufficient funds for the purchase of that property. This can be done by showing bank statements or any documents evidencing credit status. In this way, the seller will be assured that his loan will be satisfied from the resale of his property.
If you are not able to pay for the property using your own funds, you may want to try and find cash rich investors to help you with the purchase. Cash rich investors can be found through networking events, especially events that attract high net worth individuals – I find business angel and wealth management events aimed at the wealthier individuals to be great places to mingle with other wealthy people looking for better vehicles within which to invest their savings.
Prior to agreeing to any purchase, the buyer or investor should always check the sellers mortgage statements to ensure that his offer price is able to meet this obligation. If the offer price is less than the mortgage amount, the mortgagee will not be satisfied on completion of the sale and hence the sale will not be allowed to proceed.
Several parties are involved in the no money down buying process. Firstly, a surveyor will value the property you are considering purchasing. If the price you are buying the property for is truly less than the true value of that property, this will be reflected in the surveyors valuation figures. Solicitors and financiers are also involved in ensuring the deal goes ahead as planned.
The property purchasing funds that you apply for need to be based on the valuation figure and not the purchase figure of that property. This way, your mortgagee may be able to lend you the entire amount of the purchase. Often, if the discount is big enough, you can also receive cash back from this type of deal. Again, this depends on the purchase, price, valuation figures and the mortgagee who is lending to you. Rental calculations are also taken into account especially if you are purchasing the property as a rental investment.
For a truly no money down deal, none of your money should be used for that transaction. This would also include monies required for conveyancing and surveyor fees etc. These additional expenses can be paid for by using interest free credit cards and low interest loans. You can repay these loans when you decide to release some equity in your property. Obviously, in a falling market, some of these strategies become more difficult to implement and you may need to use other methods. This is why it is so important for you to keep your eyes on the ball and ensure that you remain educated to the latest techniques and standards.
For further no money down techniques, please be sure to check the bible of property investing here:
Nice post,
I learned a lot of information from this post. Thanks for the effort you took to expand upon this topic so thoroughly.
I look forward to future posts.