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No Money Down?

2013-07-21_18-22-39Aunty has never done a no money down deal.  Why?  Because it is very much harder and more sinuous (having many curves and turns) to do than a deal with money.

Most people that go to investing events and courses have a common refrain – “I want to invest but I don’t have any money.”  The lure of being able to swing an income generating deal without any money is strong, and the projections and testimonies of others that have found wealth doing this type of deals is very appealing to new wannabe investors that have no money.

Why do they have no money?

Each person has a different answer, but the fact that they are attending investing events is one of the first steps on their path to wealth.  It gives them an edge over all the other people who don’t have money and expect to somehow survive in the state of barely surviving without trying to improve their situation.

However, paying money to a guru with empty guarantees in order to learn “no money down” strategies gets them that much poorer or in debt, and less able invest.  Students are taught assignments, wholesaling, subject tos, purchases using other people’s money, forming partnerships, finding angel investors, borrowing from friends and family, etc.

What it will take to do a no money down deal

It will take time, discipline and determination.  Successful ones are those who are willing to put all their efforts into finding those rare deals and seeing them to their fruitful end over and above a lot of their competition.  Sometimes, in spite of great effort, some are not so successful, and as a result, have ruined relationships and potential huge liabilities for promises made and not kept in a deal gone bad.  Market conditions can be unpredictable, numbers can be skewed, trust can be broken in a heartbeat, and you could be in worse financial condition than when you started with nothing.

Very persuasive sales presentations will make it sound easy, that there are thousands and thousand of deals with many different approaches, and that a lot of people with money are chomping at the bit to invest with anyone with a deal.  Maybe there are a lot of people sitting on money, but if it were Aunty, she would rather invest it herself, or get into a deal that had a huge guarantee of payoff and security.

Using other people’s money or credit also means that your profit is smaller, depending on how the deal is structured.

What to do instead of no money down?

Use discipline and determination to save up some money.  This will take patience.  2 rules for wealth are spend less and earn more.  Sounds simple, but simple is the usually the best solution.

Once you earn more, you can owe less, and own more.  Meir Ezra gave that same advice for people who get a windfall of $1,000,000.  The first step, he said, was to economize.  The next was to pay off every single debt.  After that, figure out what brings income to you, and increase it.

Use your money to make money.  Rather than be the one that goes around finding people to borrow from, become a source that lends out money at rates that will compound your cash.  It starts off slow and then starts to snowball.  Be VERY careful of who you lend to, and what it is for.  Even a seemingly no-brainer of a good deal can go awry, and if it does, you want to benefit from that rather than be the loser.

In any case…

If you are in a deal that you are putting together, or a deal that you are participating in, make sure there is good communication.

Aunty and Uncle were in a no-brainer of a deal with a few other investors, and everyone was getting a bit hu-hu (angry) because the controlling managing partner was not keeping all of the players informed.  For awhile, it seemed like the deal was a pretty bad one because of poor accounting and a void of communication, and Aunty was getting riled up by Uncle who was getting riled up by some of the other investors asking him what was going on?  It turns out that everything was going fine, the project was a cash flowing solid piece of investment, and we were all on the same page of understanding once a meeting was held.  The rebellious confusion that was starting to brew could have been avoided in entirety had we all been communicated to, on a regular basis from the very beginning.

Vice versa, if you are the one putting together a deal, communicate, communicate, communicate.  The less money you have in the deal, the more you owe honesty and communication to your source of funds.

One day

Some people can easily put out a deal, or even just an idea of a deal, and have people waiting in line to invest with them.  If you are in that position, then congratulations to you!  That is a position that you need to earn by winning the trust of your fellow investors.  When you are at that point, always put their best interests before yours.  Under promise and over deliver.

But not for us

For Uncle and Aunty, we are like the turtle – slow but steady, using our own money and our own credit to get bank loans.  Fast and furious rabbits may reach the finish line faster using other investors’ money, but they may also fail faster and more furiously.

Aunty was like the impatient rabbit in her younger days.  Over the course of my rather long life,  I have “invested” in ways that were more like gambling than income producing.  I never sat down to add up all our losses because I knew it would be an ugly number.  It took years of going to trainings, listening to webinars, subscribing to gurus programs and getting lessons from the school of hard knocks before I learned better discipline.

One of the greatest virtues that I have only just recently gained is that of patience.  I used to always look for the spectacular and instant gains.  This resulted in lost opportunities to take decent profit because of greed or jump into bad deals.  During the last 4 years, I began investing in rental real estate, learned about options trading the safer way, and began building our retirement accounts with steady investment opportunities.

It felt excruciatingly slow.  No home runs – just a base hit here and a base hit there.  Occasional set backs were because of my old habits of shooting for the big win, and those losses were made more real by having them cut into the slow and steady gains that were being made.  Because of my new found virtue of patience, our up coming retirement is now very possible, and the wonderful and beautiful compounding effect is beginning to kick in!!  We are now on track to our retirement income and lifestyle goals.

If you have no money

Work a few more hours, get a part time job, find ways to generate additional income, read up and implement recommendations on how to save money.  One of the best pieces of advice that I have come across is by Mark Ford of the Palm Beach Letter.  If you subscribe (subscription is free!), you will be able to access the excellent article that teaches about 3 buckets for wealth – spending, saving, investing.  It is called “The Secret of the Golden Buckets” and it is truly golden advice for anyone starting off.

If you have money

Invest wisely, and grow your money.   Of ALL the newsletters, programs, events that I have taken, the Palm Beach Wealth Builder’s Club ($1250, refundable) is the platinum standard of step by step do-able lessons that are presented methodically and deliciously.  Rental real estate,  income for life premium, living rich, retiring next year, extra income project, how to start a business, and more.  The main contributor is Mark Ford, and he lives what he preaches, very successfully.

The main thing is that you take action.  To quote John Greenleaf Whittier, “For all sad words of tongue and pen, the saddest are these, “It might have been.”

About The Author

Aunty is a new senior citizen and loving this phase of her life. Less responsibilities, less fear of being weird, able to do more of the things that I want to do! Older, yes, slower, yes, but life is even more wonderful in my golden years and I look forward to even goldener ones.

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