No Money Down - A new perspective.

No money down was a very popular real estate investing strategy many years ago. Back in its day, it was the catch phrase for real estate investing. Every real estate guru had developed a program or written a real estate investing book about no money down.

Of course, anyone would want to walk down the street and find a $20 dollar bill. And these real estate folks were saying it was possible to walk down the street and find an entire house, virtually the equivalent of finding several thousand twenty dollar bills.

What is Assigning?

The way it works is this. You have done the work of finding the property. This means you have scoured numerous REO's or even regular properties for sale. You have done the mathematical calculations to ensure that it is a good deal. This means you have negotiated the price down from whatever the asking price is to (hopefully) 80% of the FMV (Fair Market Value). You have also checked to see what the going rents are for the area. So, you know that the rents will cover the mortgage payment and expenses, with (ideally) some extra money left over every month.

You have created the perfect deal for you... or better yet for someone else. What if you found someone who wanted to buy this property from you. They liked the terms that your excellent negotiation skills had garnered. So, now they want this deal. Would you sell it to them? Not the house. The DEAL! (Check the glossary for more REI definitions.)

What if you could make $4000 by selling them the DEAL?

Did you know that you could do this? This is the concept behind "Assigning". You find and create the DEAL and then sell the DEAL to someone else. Then you charge them whatever you think is reasonable for all your hard work and smart negotiation.

If it took you 3 days to find and create the deal, would $3,000 be a reasonable compensation. Hmmm, that sounds like $1,000 a day. Doesn't sound bad to me. Or maybe it took you two weeks to find and create the deal, maybe that's worth $8,000. The great thing about it is that

YOU DECIDE HOW MUCH YOUR WORK IS WORTH!!!

Maybe this house is the house they have been dreaming of. Maybe it's the house that's next door to Grandma. Or maybe their brother lives in the area, saw it for sale, and told them about it since they just moved in from out-of-state.

Or, quite possibly, they have been looking for a good investment property where they could make money off it. They had been looking for a way to make passive income. This property would be a great starter rental property for them.

Whatever the case, you have already locked up the transaction for the house and are going to buy it....

UNLESS.... they want it and are willing to pay you to hand over the DEAL to them.

Why wouldn't they want it? It's below fair market value. You negotiated such a great deal that they are now benefiting from it. All the other houses in the area are more expensive. Even if they pay you a $5,000 fee (made up number) they are still able to purchase this particular house for less than all the others in the area.

It's a win-win-win situation. They get a house for less than fair market value. The seller gets his house sold and off the market. And you get a finder's fee for finding and negotiating a good DEAL on a house. Plus, you've just completed a No Money Down real estate transaction.

Thinking creatively is the new era of No Money Down strategies. This particular No Money Down strategy enabled you to make money without ever owning the property. How many times could you repeat this process and make an extra five thousand dollars each time?!

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