Friday, January 26, 2007

5 Ways To Buy Real Estate With No Down Payment

When I got my start in the real estate investing game, it seemed very hard to learn any actual way to buy properties without any money out of my pocket. To say the least, I was discouraged. To save some of our newer members the same frustration, here are 5 tried and true "no money down" real estate investing methods.

The Owner Finance

Quite simply put, this is what happens when the owner owns the property free and clear and extends credit to you in the form of a note and mortgage. If you negotiate the owner finance correctly, you can get into the property with no money down. What's more, if you're really sharp in your negotiations, you can get a pretty nice interest rate as well. The downside of this method is that most owners simply won't do it. There are those who will, but they are a tiny minority among motivated sellers, and even a smaller minority among sellers in general. If you can negotiate an owner finance, good for you! If not, maybe one of these other methods will work better for you.

The "Blanket" Mortgage

The blanket mortgage is one of my least favorite methods, for one simple reason: benefit. The seller gets the tax benefits while the investor pays down the mortgage. In a blanket mortgage deal, you (the investor) makes payments to the property owner which exactly match the owner's mortgage/insurance payments. The owner then pays his mortgage & insurance in kind, getting all the benefits of ownership without paying in a dime. Another pitfall of this method is the possibility of a dishonest seller taking an investor's money for 3-4 months until the bank forecloses, then filing bankruptcy, thereby keeping the house and the investor's money and leaving the bank and the investor in a lurch. You can use this method, but be very careful!

The Partner / Backer

This method can be very lucrative for you and for your partner/backer. Simply, you find someone who wants to invest their cash into your deal, while you invest your time, knowledge, negotiating skills and other efforts. You can split the profit any way you like, and none of the money for a deal comes from you!

The Assumption

Some day people will write songs praising assumable real estate loans. Until then, let me give you a short background on them. An assumable loan is a loan anyone may assume as long as they meet the lender's qualifications for credit score, employment history, etc. Once upon a time the FHA and VA both offered assumable loans with NO qualifying. All you had to do to assume one of these loans was fill out a form and send the agency around $50. There are still some FHA/VA assumable loans out there, but not many. On December 1, 1986, the FHA stopped allowing non-qualifying assumptions and on February 29, 1988, the VA did the same. If you can find an FHA or VA loan issued before these dates, chances are it is still fully assumable without qualifying.

The Lease/Option

My favorite method of property acquisition, the lease/option is both wickedly simple and highly profitable - a combination most investors truly love. In a lease/option, you enter into what is basically a normal lease agreement. The only difference is in the option. An option is just what it sounds like - it's an option to buy a property at an agreed-upon price within a certain span of time. When you put them together, you end up with a rent-to-own scenario. You pay rent each month, the seller credits a certain amount of the rent toward your purchase price. If you decide to buy the property within the option period, you just give the seller a check and get the deed. If you decide not to buy the property, you've still controlled the property for that period of time. Controlling is sometimes better than owning. If you control the property, you don't pay the property taxes. You also don't pay homeowner's insurance. You don't pay renter's insurance, either - your tenant/buyer does. You collect a check once a month, send the seller his share and keep the difference. And each time you put a new tenant/buyer into your property, you collect another option consideration (which is similar to a down payment but usually smaller and 100% non-refundable). The benefits of lease/options are various and sundry, but for this article, suffice it to say it's a great way to acquire/manage real estate.

Keep in mind that this list is by no means all inclusive. There are literally hundreds of ways to buy or control real estate with none of your own money. These methods should get your creative juices flowing and help you to come up with others on your own.
David Jaymes.

5 ways to get credit-card savvy

The good thing about credit cards is that they let you make purchases when cash isn't an option. The not-so-good thing: They tempt you to impulsively charge items you don't really need. Keep in mind that every time you use a credit card, you're borrowing money. So think of credit-card debt as a high-interest loan, and consider these five smart ways to use credit cards:

SHOP AROUND With hundreds of credit cards to choose from, it's smart to shop for the best deal--a card with no annual fee and a low APR (annual percentage rate)--advises Pat Martin, a financial consultant at Ryan Martin Associates in New York. Read the fine print to see if a low APR is a promotional rate that expires after a few months and then leaps up, often dramatically, particularly if you make one late payment. If you plan to pay your bill in full each month, look for a low annual fee and a long grace period--the time between the statement date and the payment-due date in which you'll avoid finance charges. If you plan to carry a balance, go for the lowest interest rate. Also look for a low rate on cash advances. Comparison-shop at and

IMPROVE YOUR CREDIT RECORD A credit report is a snapshot of your debt-paying activity; your credit (FICO) score--a number ranging from 350 to 850--predicts whether you're a good credit risk (above 620 is considered respectable). The higher your score, the better your chances of getting a low interest rate on a credit card, car loan or mortgage. Charging near the limit or maxing out credit cards can lower your score, Martin says. Get a copy of your credit report at least yearly from the three major credit bureaus ( or [800] 685-1111; or [888] 397-3742; or [800] 916-8800) and challenge any errors. (Under a new law, by September 2005 all consumers will be able to get a free credit report.)

LIMIT YOUR NUMBER OF CARDS A wallet filled with credit cards (which represent money you owe or can borrow) may work against you when you apply for a loan or mortgage. Two or three cards are enough, Martin says. If your credit report indicates that you already owe or can access a great deal of money, potential creditors may determine that added debt could strain your ability to repay.

SWITCH BALANCES CAUTIOUSLY If you transfer your high-interest balances to a low-interest credit card, be aware that the low rate may last for only a limited time, and that many credit-card companies assess transaction fees, sometimes up to 4 percent of the amount transferred. Avoid cards that charge hefty fees, which may outweigh any savings offered by a lower interest rate. Scrutinize the application or call a company representative and ask about all charges before signing up. Once you transfer the debt, stop using the old card.

AVOID CREDIT PITFALLS Despite the benefits, there are pitfalls that accompany credit-card use: It can be costly, with some interest rates higher than 25 percent and whopping annual fees, finance charges and penalties that can jack up the purchase price. And you risk spending more than you can pay. Calculate how much you can afford to charge each month, then put your receipts in an envelope and keep a running total on the outside. Once you reach your limit, put away the plastic.


5 Ways To Stress Relief

Stress has been called 'the plague of our time'. More than ever before stress relief seems to be in great demand and especially for people in stressful jobs or careers. It would be more appropriate to ask which jobs or careers are not stress related and you would probably be able to count the number on one hand. As a self help tool for handling stressful situations in your everyday life, I'll give you 5 simple methods for instantly relieving stress that has worked great for me. I really hope these methods can be useful for you as well.

Remove stress with relaxation

If you are stressed, sit down at the most comfortable place you can find, close your eyes and say to your self slowly:

"I am calm. Absolutely calm. I feel relaxed. My hands are heavy. I'm calm and relaxed. My arms are heavy and relaxed. My arms and my legs are relaxed and heavy. My torso is relaxed, calm and feels heavy. My shoulders and neck are heavy and relaxed. My entire body is calm, relaxed and heavy. I feel great, relaxed and calm. I feel warmth spreading from my stomach to all parts of my body. My entire body is calm, relaxed, heavy and warm. I feel good and I’m totally relieved from stress. "

Continue having this feeling of being totally relaxed and stress less for as long as you can or want. When you decide to finish this down-stressing session, take a deep breath and stretch out your arms in a short and energetic movement. How do you feel now? Practice this exercise every time you feel stressed.

Sit down and look at the Sea

If you are stressed and need to relax go to the harbor, the nearest beach or any place close to the sea, or a lake if you live in the inland. Just sit there and feel it, smell it, hear it. Don't think so much, just sense. Do you feel relaxed? Keep on until you feel the stress has left you.

Take a Walk

If you are stressed leave your home or office and take a thirty minute walk. Just walk don't talk to anybody. Try to relax while you walk. Instead of thinking or focusing on your current problems, try to sense your environments like smell, sound impressions and what you see as well as your inner feelings; heart beat, your feet touching the ground and the movements of your arms. Do you feel relaxed now? After half an hour your stressful feelings should have disappeared.

Listen to Music

If you are stressed sit or lie down, walk or do whatever you want, while you are listening to music. Don't listen to heavy rock and similar music, this might invoke even more stress. Relaxing with a Nat King Cole ballad or two, some slow pace smooth Jazz, the Adagietto movement of Gustav Mahlers 5th symphony or Mozart's Grand Partita for wind instruments are all great. Do you feel more relaxed? Is your stressfulness leaving you? It should.

Laugh, laugh and laugh

If you are stressed, call or visit friends that you have had much fun with. Talk with them about funny things you have done in the past and as they the youngsters say, “Get your laugh on”. Do all you can to provoke good and healthy laughter as it is very relaxing and dissolves the away the stress. Read a joke magazine, watch a comedy DVD or video or listen to a funny audio. If you have kids around you, play a crazy and childish game with them, they love it and everybody will relax. The point is, laugh and your stress will disappear and you'll feel relaxed.


9 Ways To Avoid Credit Card Pitfalls

1. Be aware that the card issuer has a great deal of leeway. They reserve the right to change the terms of your card, including the APR (annual percentage rate), at any time, for any reason—with as little as 15 days notice. So check your monthly statement carefully.

2. Even if you make your credit-card payments on time, the bank can raise your interest rate automatically if you're late on any other payment elsewhere (such as a water or heating bill, or an outstanding charge on any other account). This is called "universal default."

3. Your credit score—commonly referred to as the FICO score—has become a vital statistic for Americans seeking credit, and can be widely shared. Even if you don't think you have a credit problem, numerous studies—including one by the General Accounting Office—indicate that 70 percent of credit reports have some sort of error! Check your credit report at least once a year—since your credit report is the basis of your all-important credit score, you want it to reflect your true credit history. A free resource:

4. There is no limit on the fee a credit-card company can charge a cardholder for being even an hour late with a payment. That's due to a 1996 U.S. Supreme Court decision (Smiley v. Citibank) that lifted the existing restrictions on late penalty fees. Today, $30 is the most common late fee, according to the Consumer Credit Counseling Service. Ten years ago, that number was $13.

5. There is no federal limit on the interest rate a credit-card company can charge. Take a look at your credit-card statement. Most likely, the return address is located in a states where state governments have weak "usury laws." These usury laws determine whether or not there is a cap on the amount of interest that can be charged on a loan.

6. It's possible to negotiate better terms if your interest rates change or you have received a penalty fee. Always call your card issuer to try to negotiate these terms.

7. Most lenders like a debt payments-to-income ratio with not more than 36 percent of a consumer's gross income, according to the Consumer Credit Counseling Service of Greater Dallas. In other words, for every $1,000 of income, don't have more than $360 going to pay debts. If you exceed this ratio and want more credit or a better interest rate, you'll have to reduce your debt or increase your income.

8. Specialty cards and department-store cards usually have higher interest rates than general-purpose cards like Visa or MasterCard. While they may save you 10 percent on your first purchase, you'll likely end up paying for it in the long run.

9. One late payment can result in a significant drop in your credit score—of up to 100 points—so pay on time every time. A drop in your credit score of just 50 points can mean you pay $100 more a month in your mortgage payment.