You’ve seen their ads on Facebook or Instagram feeds. Or maybe those paid ads on YouTube when you are just trying to learn real information about how to get started in real estate. I know that you’ve seen them because no matter where you live – which big city, sleepy suburb, or remote rural area – they’re there.
In fact, ads that say “Learn how to flip properties!” are everywhere these days. This has become the #1 gimmick to trick people into signing up for these so called “gurus” real estate investing programs.
Sure, when the economy crashed everyone wanted to get into real estate investing. That is why every other ad that said “Learn how to buy real estate with no money and no credit!” was designed to take advantage of their desire.
What the online ads should say is “Here is a crappy sales pitch to buy my crappy system for a price you cannot really afford”.
Of course, you’re smarter than to fall for these low-rent snake oil salesmen untrue sales pitch. But, unfortunately, these same marketing pitches to make fortunes investing in real estate quickly and easily are all over the Internet, too, and they’re often far more sophisticated in appearance.
For instance, it irks me when online real estate “investing” “gurus” like Tai Lopez, Ian Flannigan, or even TV stars from reality home shows like Armando Montelongo or Cody Sperber from the “Clever Investor” start shilling their seminars, workshops, and systems to the general public.
Will they really teach you a treasure trove of secrets and personal tricks that will help you buy and flip properties with no money down and even bad credit?
At best, the answer is “maybe.” But even if you can glean some knowledge from their books, videos, and CDs (all available with “.99” on the end of the price) that helps you buy real estate with no money down and with bad credit, the juice won’t be worth the squeeze.
No matter how much you WANT to believe that these kinds of deals are out there just waiting for you (that no one else is snatching up), you have to realize that even if you could do a deal or two with no money (its called a simple referral by the way), there wouldn’t be enough of these deals to pay your internet bill, let alone your rent or mortgage.
There is a way to flip a home without actually legally purchasing the property, which is called an “Assignment of Contract.” But even with those rare deals, you’d have to kick down an Earnest Money Deposit – required per federal law as one of the elements to make a contract valid.
This deposit acts as a safeguard for both buyer and seller, securing your chance to close the deal per the agreed upon terms without someone else stepping in, while also preventing buyers from running around town making offers and entering into contract on hundreds of properties at the same time, only to back out. In most markets this deposit, or Earnest Money Deposit (EMD), will be $1000 on average.
Don’t get me wrong; an Assignment of Contract does have a time and a place, but it’s usually used to reduce double closing costs, fees, tax adjustments, etc. when a property is bought and resold in a short time. You can do it, but both the buyers and seller have to agree and come to the table. Besides these are for deals with a small profit (typically only $1,000 – $5,000 for this kind of assignment “flips”) and you don’t want to just concentrate on these small profit deals.
No money down? No credit? You’re better off flipping through your feed on FB than putting all your attention into doing these types of deals just because it sounds so easy! If it sounds too good to be true, than it probably is!