Let me guess, you're one of the many that have heard you can purchase real estate with no money down. Legally this cannot be done. Well sort of anyway! In order to have a legal real estate contract you must put something down of value, that can be a cat, a hat, a mat, or anything else for that matter. It is also common to utilize real estate, vehicles and more as a consideration on the purchase of a home.
Now 9 times out of 10, the item of value being put down for “legal consideration” in a real estate transaction is none other than…YOU GUESSED IT, Money! You can pretty much count on the fact that you will be utilizing Money to tie down your contracts and secure the majority of your deals. Here's the kicker, though you will require something down of value, I ask you this one question, “Does $1.00 hold value?” Yes, indeed it does!
It is not uncommon for creative investors to lock properties down under contract from $1-$10 at max. I myself, have tied down multi-million dollar properties for nothing but a dollar. This is NOT HYPE, and you'll be missing out big time to underestimate the power of this technique. See at the end of the day it all comes down to seller motivation, and their confidence and trust in you.
Think about the motivation of the sellers that we work with in the niche of creative real estate investing. First off, their motivation on a scale from 1 to 10 is an 8 or higher and for many of them it's off the meter! These people just want to know that their home will be sold and their headache will be gone sometime in the near future.
What may look like one of the greatest investments on earth to one person could have been a world of hurt to the next person. You may not know how hard it was for them to keep up with their monthly payments and to finally be off the hook. For some sellers they could have also been behind on payments and possibly threatened with a foreclosure.
With the seller finally seeing light at the end of the tunnel, it's highly unlikely that they will back out on the opportunity you are providing them. The ability that they now have to cash out on their headache as quickly as possible is priceless to them.
So in summary, it is illegal to contract a property and not have something of value to make that contract binding. That entire contract can be determined as invalid and hold no recourse in the case of legal action. Though anything of value could be considered sufficient enough to bind a contract, typically money used. I prefer to use $1-$10, but for all my experienced investors I'm curious what you use. Feel free to comment with your experiences below.
As always thanks for reading my blog posts. I hope that I helped someone learn more about the “no money down” concept today. Please share this post through your favorite social media outlets. I appreciate your support!
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