I’ve had quite a few people interested in how to do “no money down” deals lately. If you’re an average American, the thought of doing real estate without having to put any money into it (and then getting a lot of money out of it) probably sounds really good.

It probably sounds almost too good to be true as well…

A Word of Warning
I’ve seen seminar companies flowing in and out of cities across the country offering to teach people how to cash in on no money down deals, so I thought this would be a good time to give you a word of warning about what these seminar companies are teaching.

What it is and what it’s not
With a basic understanding of how these deals work, there’s something I want to clear up for you. “No Money Down” does not mean you won’t be spending any money on the deal. It just means that you can profit on a real estate deal without having to buy, or put money down on, the actual house.

That’s all it means.

It doesn’t mean “if you have $0 in your bank account you can still do all the real estate deals you want” like many people assume and (unfortunately) some guru companies are happy to let you believe. It just means that you can receive control of a property without purchasing it.

Yeah, you knew there was a catch.

The fact is, every deal will take money. If you didn’t put any money down on the deal, then you probably spent money finding the deal.

If deal fell in your lap for nothing, then closing or finalizing the deal will take money.

And then selling the property or renting it out will take money.

What kind of money will you be spending? Occasionally you’ll spend very little, often it will be several hundred, and sometimes several thousand.

The Sad Truth
The point is that too many people who are completely broke or deeply in debt hear the real estate gurus advertising “no money down” real estate deals and they say to themselves “No money down? What do you know! That’s exactly how much money I have available to do real estate! I’d love to do real estate if it won’t cost me anything!”

So they go to some free seminar that promises to teach them how to do “no money down” deals and they find out that in order to actually learn how to do those deals you have to sign up for the next boot camp. And the boot camp costs–you guessed it–money!

So they spend money they didn’t intend to on the next “no money down” boot camp the guru offers, expecting to then be able to do all the real estate they want for no money, only to find out there that the real estate deals do in fact require–once again–money!

And if the aspiring investor is completely out of money by that point, guess what they can’t do–real estate!

These are the kind of scenarios I and the other investors I work with help people avoid when they’re first getting into real estate.

I’m not saying that the gurus are bad people or that you shouldn’t spend money on education (I fully believe that the best money you’ll ever spend is on education). I just want you to be aware that if you don’t have a penny to your name, then “no money down” real estate is not the answer.

Here’s the answer–real estate can’t be done without money, but it doesn’t have to be your money that you use. It can be, and often should be, someone else’s money.

And that is the key to accelerating your real estate business–leveraging other people’s resources so you can do more than you could have done on your own. Amber Sea