Hi Jim,
You are making plenty of sense. If you can get conventional financing don’t hesitate if a deal looks great. The reason there is so much hype on here about no money down is because alot of people here are just starting out or trying for a fresh start and do not have the credit or cash to get financing conventionaly. But the truth is everyone should be working on their credit to put them into a position where they can qualify for a loan in a snap, because the truth is money talks to the seller and the easier a offer is to understand the quicker it is accepted.
Good Luck!
Carrie
Buying RE “traditionally” - newbie - Posted by Jim (NY)
Posted by Jim (NY) on August 13, 2003 at 15:44:31:
Hi,
I know that the premise behind this site is buying RE “creatively”, however, as a newbie with access to some cash I was wondering if buying income properties “traditionally” (going through a lender) is a bad deal. This particular realtor said that she did own property herself, and she works with a lot of investors.
The reason that I am asking is that I took the plundge and made my first call to a “for sale” add in the Sunday paper. The property advertised was through a realtor who basically told me that not to many people in my area are willing to hold paper (don’t worry, I don’t believe her for a second). She suggested that I go the “traditional” route (pre-qualify for a mtg), and that she had a couple of properties in my price range that qualify for sec. 8. She wanted me to pre-qual for a mortgage and have the lender fax her the letter of qual.
I worked the numbers, and figured that with 5% down I could still get ~ 15-20% ROI on the property buying this way. Seems like a good deal to me, but there seems to be this “stigma” around buying NO MONEY DOWN. I called a lendor and pre-qual. for a loan. In reality, if I really want to buy this NMD, I can use credit for the down pymt. and still get a decent ROI. Am I making sense, or is there something that I’m missing? Thanks in advance, Jim (NY)
If you can afford it, and it makes financial sense, then do it. You don’t get brownie points for no cash down, no award, no nothing.
If you can buy something no cash down, and you plan on buying and buying, then fine. When i started buying properties, i was buying to rent out, and could have put 5% down, but put 10% down for a better rate. I could have done some deals with very little cash down, but opted to pay several thousand dollars deposit to bring the rate down 1-2%.
Most people that list with a Realtor do so because:
They don’t want the hassle of doing showings & negotiating.
They want cash.
They don’t want to be creative.
They don’t know what they’re doing.
and I’m sure many other reasons.
Advantage for you:
You hold the property fee simple as opposed to a lower form of ownership. (probably different terms in other states esp. title theory states like CA)
I hold all my properties fee simple though I’m putting together a new land contract right now, and I sleep very well because of that.
Your Realtor was correct in the fact that the MAJORITY of listed sellers will not accept a creative solution, period. Just remember this: Some will, some won’t, so what? -NEXT!