No money down home buying sounds like a dream. However, this dream can become your reality. The trick is to know and understand the specific terminology used in the real estate industry. With this knowledge in hand, anyone can become an investor.
A mortgage broker is the most important partner you can have in real estate investing. This type of broker will match you to the best possible mortgage lender for your needs. Whether you are looking for no money down home buying or are self-employed, they will find the perfect mortgage options. Build an on-going relationship with a good mortgage broker, and you can rest assured they will keep your best interests at heart.
Buyer-Broker or Buyer-Agent
You may be used to the idea of simply calling a realtor or talking to a real estate agent you personally know. However, real estate agents are seller agents. Their job is to get the most possible money for the seller of the house. A buyer-broker, or buyer-agent, is only interested in getting the best deal for the buyer. As a result, this type of agent makes a great partner in the formation of your real estate empire. They can also mean thousands of dollars on the table for your no money down home buying purchase.
A buyer-broker splits the commission from the purchase of the property with the buyer. This split can be as high as 50%, so you should speak to many brokers until you find one willing to give you a good cut. Broker commissions run between 5-7% of the sale price, depending on your area.
Use the Property’s Rents
As the buyer, you are entitled to the prorated rents charged on the property you are purchasing. That makes this a perfect solution for anyone who wants to get into no money down home buying. If you close on the second day of the month and there are 30 days in that month, that means you would receive 29/30th of the rents on each unit.
By purchasing a multi-unit property that is fully rented out, you could have hundreds or even a few thousand dollars at closing. Always buy a triplex or a quad if you can. Skip tracing is a fantastic way to find properties like this. These two set-ups maximize your cash-flow but fall short of the government’s definition of multi-family.
Use the Tax Man’s Cut
Most people know that the rental fees are prorated. However, most people do not realize that the taxes are prorated as well. You will be due prorated taxes on the property if you ourchase near the end of the year. This can amount to thousands of dollars, depending on the type of property you are purchasing. This money goes directly against the purchase of your new property.
Interest-only and ARM
Consider looking into interest-only and Adjustable Rate Mortgages. Although these types of mortgages can be riskier over a long period of time, they can be perfect for beginner investors who just need a way into the game. In a year, you can always renegotiate and change this type of mortgage over to a standard 30 year.
In the meantime, there has never been a better time than this latter half of 2020 to get an ARM. Since an interest-only mortgage requires only interest payments–thus the name–it can save you hundreds of dollars a month.
By using every one of these methods, or your own combination of them, you too can get in on the no money down home buying dream.