No money down property.

This is the property get rich quick scheme that never goes away. It works for some - but can it work for you?

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There are 3 main versions of the 'no money down' landlord method. The first two relies on being able to find desperate vendors who are willing to sell their property 'below market value' (BMV) and go a bit like this. One is legal, the other is fraudulent, but both were popular! Example figures are used for simplicity:

  • You see a property advertised for £100,000 and conclude that is it's true market value.
  • You beat the vendor down into agreeing a selling price of £75,000.

In the legal version you borrow a small deposit from a relative or bank and:

  • Put down the deposit (e.g. £7500 at 10% of £75,000)
  • Get a mortgage with no extended tie in period.
  • Immediately on completion you remortgage and get the deposit back to pay off your loan, plus maybe enough to put your next deposit down.

In the illegal version you require the use of a corrupt solicitor:

  • The sale is put through at £100,000.
  • The surveyors agree the value.
  • Your bent solicitor makes out a deposit has been paid.
  • The mortgage company lends £75,000 which is given to the vendor.

The 'latest thing' in no money down is 'rent to rent', 'let to let' etc, In this the landlord doesn't own the property and therefore doesn't get any capital appreciation, but has pretty much no risk either. It works as follows:

  • Find someone willing to rent out their property (in other words an existing or potential landlord)
  • Offer them the market rent, guaranteed.
  • Enter into a contract with them, at which point you become the landlord and they your superior landlord.
  • Sublet the property at above the normal market rent - usually done by turning reception rooms into extra bedrooms and renting the property room by room.

The difficulties in each version should be obvious, although this doesn't make any of the schemes unworkable. Firstly finding below market value properties. This is normally done by:

  • Mass leafleting in suitable areas to find distressed sellers.
  • Recruit friendly estate agents to flag up people needing to sell quickly.
  • Advertising as a 'we buy any house' company.

Secondly locating a corrupt solicitor. I've never done it but I presume it's about networking.

Thirdly finding landlords to make your rent-to-rent offers to. This shouldn't be too hard, as landlords tend to make it known when they have empty properties by advertising them in various media.  Even letting agents working on behalf of landlords might be interested in the rent-to-rent offer of having guaranteed rent for no work on their behalf.

However the downside is all the bad publicity that rent-to-rent has generated. It's not common knowledge that a lot of people doing it are complete chancers so landlords are understandably more cautious.


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