Buying real estate without using any of your own cash sounds great. But if it`s so easy, why are so many ”no-money-down” gurus operating expensive seminars or selling pricey learn-at-home courses instead of buying property themselves?
Q-I have never bought real estate before, but I would like to buy a home. The trouble is, I only have about $2,000 in cash. A company is advertising a weekend seminar that it says will show me how I can buy a house with no down payment. Will the $600 fee I would have to pay to attend the class be worth it?
A-Readers often ask me about the value of these ”no-money-down”
seminars. And although I hate to say it, most of the people I have known who have plunked down their hard-earned cash to attend these classes walk away disappointed.
True, you can make a lot of money by finding a seller who`s so anxious to sell his property that he`s willing to enter a ”no-down-payment” deal. But the truth is, these sellers are few and far between. Even worse, first-time buyers who don`t have much knowledge about investing in real estate can easily run afoul of the law by entering a no-down deal because they don`t fully understand the legal intricacies that are often involved.
As an alternative to paying several hundred dollars for a ”no-money-down” course, I`d suggest that you pursue a program that will reward you with a license to sell real estate upon its completion. It might take a weekend or two of extra work, but the basic knowledge you`ll acquire by attending a real-estate school and getting your salesperson`s license will probably outweigh the information you`d gain by attending a weekend seminar.
There are a few other reasons why I suggest that you get your sales license before you shell out big bucks for a ”no-money-down” seminar. First, many realty firms will offer to reimburse you for your educational expenses the minute that you close your first sale. Second, once you have a basic knowledge of real estate law, you`ll be in a much better position to understand how ”no-money-down” deals work.
Finally, getting your license can give you first crack at underpriced homes because agents usually know when bargain-priced houses come on the market before other buyers do. So, having a license to sell real estate can give you an edge.
Q-I often see newspaper advertisements and articles that use the term
”REO,” but I don`t know what this abbreviation means. Can you clarify?
A-Sure. The term ”REO” is shorthand for ”real estate owned.” It`s bankers` jargon for property that a lender has foreclosed upon and now owns, which must be accounted for under the ”real estate owned” section of its financial reports.
Q-I am a single man and am looking to buy a condominium or townhouse. I can`t decide if I should purchase a one-bedroom unit to save some money, or pay an extra $10,000 or $20,000 to buy a two-bedroom unit. Which condo has more appreciation potential?
A-As a general rule, condos or townhouses with two bedrooms are usually a better investment than condos with only one bedroom, for a variety of reasons. For starters, a two-bedroom unit provides you with a lot more room – a room where you can keep your files, set up a computer or television, or let your overnight guests sleep.
Perhaps more important, there are usually a lot more buyers for two-bedroom condos than there are for one-bedroom units. Most married couples need more than one bedroom to store all their clothes and other items, and a second bedroom is a virtual necessity if they work at home or have children.
It all boils down to the basic law of supply and demand: In most parts of the nation, the number of married couples looking for a condo is greater than the number of single people looking for one. As a result, people who buy and then sell a two-bedroom unit usually make more money than those who originally purchased a one-bedroom condo.
