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No money down.....no thanks

8th May 2009

Im amazed at the amount of investors that still look for no money down deals.

Now before anybody comments, im sure there are plenty of investors out there that do look for no money down deals whilst still having the funds to top up or secure a mortgage if need be.

However, i would guess that for every one of these type of investors there are another 5 that are simply trying to get something for nothing.

Why any investor would look to purchase an investment property with what is in essence 100% funding bemuses me.

Have they not seen what has happened over the last year?

By purchasing via a no money down deal you are in essence putting yourself in almost immediate negative equity, all the investor will need is to not be able to rent the property for a few months or a tenant to not pay the rent and the investor is in serious trouble.

For me, property investment will always have a very dominant place in an investment cycle, i wholeheartedly agree with the quote “there is never a bad time to buy property”.

This may seem a stupid quote to a few of you but i take it to mean “there is never a bad time to buy property” (if you are in it for the long term).

This makes much more sense and i believe is true.

If you are purchasing property to hold and rent then putting a certain amount into the mortgage is a must.

It allows you to get onto a competitive rate, does not put added pressure on your earnings and also gives you some equity if you need to utilise it in the future.

If you are looking to invest in the future, put some money in, be part of the solution, not the problem!

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