Lack of cash need not bog you down

property.
The questions are – what is the price, property condition, the terms, location and whether the seller is highly motivated to sell?
We mentioned that a point system should be designed, and it should rate every answer and if the answers reach a certain rating, the investor should make any offer, as the property is worth investing in.
However, I have been receiving queries on how one without cash can also be involved in property investment.
I am going to attempt to list ways that everyone can be involved in property investment through what the business world calls OPR (Other People’s Resources) or OPM (Other People’s Money)
This method of using nothing down is not widely used in our country except by the already affluent although it is very common in First World countries. Quite simply, nothing down is an attitude; by this, one does not have to focus on their lack of cash, credit or collateral.
It stems from the attitude that the world has abundance, where one does not have something; someone else has it and can be convinced to invest in you.
This is why you look for motivated sellers who are willing to sell you the property without any traditional hurdles that a normal sale would entail.
Then if a conventional mortgage is required, you turn to your partners to qualify for loans and provide the necessary down payments.
Your main responsibility is to be a bargain finder, for which you will receive a handsome share of the profit.
The obvious question you will ask yourself is why a financially strong investor will want to assist a financially weak investor.
This is because you can show them how they can win by doing so. These investors do not have the time, inclination or the expertise to ferret out great real estate deals.
Eight potential partners close to every real estate deal can be educated to the benefits of participating with you.
Namely the seller, realtor, creditor, renter, loan sharks, mortgage holders, private individuals and the seller.
All these can collaborate with you to create a potentially successful real estate investment transaction.
There are several nothing down options and sometimes one just has to be inventive with new ideas that cater to different situations.
We will consider firstly a rental property with an option to buy.
An imaginative tenant will look for a homeowner who is willing to rent his property out with an option to buy; this might indicate that the seller may not need a large down payment.
It may be better to lease property with an option to buy than to buy outright, for example an owner is willing to lease his house for US$1 000 with an option to buy in two years for US$150 000.
If the property value rises to US$200 000 then you can exercise your option, gaining US$50 000 in profit.
If it does not, you look for another lease option. These, however, are not very common in our economy but it does not mean that there are not there or cannot be negotiated.
If you manage to negotiate a super deal and are credible to qualify for a mortgage with a banking institution, then one has to use that option and borrow.
Let me clarify a super deal before I go further. Let us say, for instance, the house is valued at US$100 000, you have negotiated for yourself a deal where you can purchase it for US$70 000.
This in essence means there is a possibility of making up to US$30 000 profit quickly.
If banks are not an option for you, you could consider the option of hard moneylenders (loan sharks) as long as you are certain that after calculating all the expenses, one is still left with a profit.
This option must be taken after careful consideration, as the ramifications of a bad investment are dire.
The fact that one does not have money does not mean everyone lacks.
An investment partner can be persuaded to loan the buyer all or part of the down payment.
Here you will have to convince the partner that your property will gain a good profit although you might need to give up part of your profit or the equity in the property.
It is up to you how your partnership agreement is structured, as long as you are able to purchase the property for nothing down on your part and both you and the financial investor make money.
l Vengai Madzima is a property consultant and analyst with Wisdom Properties. He can be contacted on 0772 468093 email: [email protected]