No Money Down! Buy Cheap Foreclosures! Come to our Seminar!

I’ll save you the cost of the seminar and simply tell you what all the real estate “secrets” are that you will be taught in the class.

The “secret” to No Money Down

The No Money Down real estate purchase usually involves finding someone with an existing home and mortgage that is financially in trouble and likely to be in foreclosure. Most city/county governments will publish a foreclosure list at least 30 days before the foreclosure and you can usually pick up a foreclosure list at the local city/county office.

Once you find the list, you essentially start cold-calling or visiting the homes and speak with the owners and offer to purchase their home for a small amount usually $500-$1500. Note: This isn’t money down to a bank for a mortgage this is a fee you’re paying to the owner to “buy” his home and transfer title to you.

Why would someone take $500-$1500 for their home? You essentially explain to them that they are in foreclosure and they’ll get nothing for their home once it sells at the court house auction. By taking $500 to $1500 they are walking away with some money.

Once the title transfer takes place you simply send the mortgage payments (and any payments overdue) to the mortgage company. Voila! You have a No-Money-Down home/mortgage.

A variant on this strategy is to partner with a bank and get REO properties (properties foreclosed/bought back by bank) but this essentially involves creating relationships with banks and is often difficult to obtain given the fierce competition.

Next are homes that have been abandoned. These properties end up in tax foreclosure and a similar list can be obtained at your local tax assessors office. Laws vary by state but these are much trickier because the owner usually has a window to pay the overdue tax bill at which point the property must be returned to the tax offender. The cost of the home/property here is usually the amount of the tax bill overdue but often there may be a mortgage attached to the property as well.

Lastly, there are the foreclosure homes actually being auctioned off at the court house. By the time the property reaches here you know that:

  1. There was no one willing to convince the current owner to part with his home for a fee
  2. The bank opted to put the property for auction rather than buy it back to resell it
  3. The property may have issues if no one was willing to buy it before it went to auction
  4. The property will likely go for close to its net value because competition at the court house is fierce

Tomorrow, I’ll tell you why I haven’t invested in real estate properties despite knowing all the “secrets” to the magic formula.