Lately I’ve had quite a few people interested in how to do “no money down” deals. If you’re an average American, the idea of ​​doing real estate without actually putting money into it (and then making a lot of money out of it) probably sounds great.

It also probably sounds too good to be true…

A word of warning
I’ve seen seminar companies popping in and out of cities across the country offering to teach people how to take advantage of no-down-payment deals, so I thought this would be a good time to warn you about what these seminar companies are teaching.

What is and what is not
With a basic understanding of how these offers work, there is something I want to clarify for you. “No down payment” doesn’t mean you won’t spend money on the offer. It simply means that you can benefit from a real estate deal without having to buy or put money into 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 transactions you want” as many people assume and (unfortunately) some guru companies are happy to have you believe. It simply means that you can receive control of a property without buying it.

Yes, you knew there was a catch.

The fact is that every deal will require money. If you didn’t put any money into the deal, then you probably spent money to find the deal.

If the deal fell into your lap for nothing, then closing or ending the deal will require money.

And then selling the property or renting it will require money.

What kind of money are you going to spend? From time to time you will 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 real estate gurus advertise “no down payment” real estate deals and say to themselves “No down payment? What do you know! That’s exactly how much money I want”. I have available to do real estate! I would love to do real estate if it doesn’t cost me anything!”

So they go to a free seminar that promises to teach them how to do “no money down” deals, only to discover that to really learn how to do those deals you have to sign up for the next boot camp. And boot camp costs, you guessed it, money!

So they spend money they didn’t mean to spend on the next guru’s “no down payment” boot camp, hoping they can do all the real estate they want for no money, only to find out that real estate, in fact, offers require, once again, money!

And if the would-be investor is completely out of money at the time, guess what he can’t do: real estate!

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

I’m not saying that gurus are bad people or that you shouldn’t spend money on education (I fully believe that the best money you will ever spend is on education). I just want you to know that if you don’t have a dime to your name, then “no down payment” 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’s the key to accelerating your real estate business: leveraging other people’s resources so you can do more than you ever could on your own.

My next article will detail how to find money to do real estate business and (if you need knowledge) even finance your real estate education. Knowing how to find money to finance your activities is an essential skill if you want to be a successful real estate investor.