Let's start with the following premises:
You can buy real estate with no money down . See our pages on the subject: Public Page Member-only Page
Property that is well located, and properly maintained, will eventually go up in value because of the inevitable inflation in both population and money.
Now the howevers:
As we discuss in more detail elsewhere on the RHOL Web Site, when investors buy with no money down, there is almost always a down-payment paid to the seller in some manner. Anyone with good credit can borrow money; from banks, individuals, or even the sellers. When we investors buy with no money down, it simply means that we got 100% financing using some combination of resources.
Buying property is easy. Buying the right property at the right price and terms takes knowledge, guts, time and a little luck. But then, owning income property can be a lot like having a child. They don't usually turn out to be worthwhile unless you spend the necessary time and effort with them. Sometimes you even have to feed them for awhile before they mature and begin to pay you back.
The most unexpected statistic in residential rental real estate might be the number of properties with negative cash flows, particularly among smaller properties. In a study, (published in Real Estate Finance , Winter 1995) by John L. Goodman Jr. and Michael R. Grupe of the Research and Statistics Division, Board of Governors of the Federal Reserve System, more than one-third of all rental properties have negative cash flows. Among properties with one to four units, 54% have negative cash flow, compared with 26% with five-plus units and only 11% of properties with 200-plus units. The Northeast has the biggest problem; 57% of all the small rental properties have a negative cash flow. That unhappy reality is because single family homes in good neighborhoods are usually worth more than they can be rented for.
Most TV sales pitches tell you about the student who bought a single family property for, say, $70,000 that they believe is worth $100,000 just a few weeks or months later. They don't tell you how much time and money the y, as the new owner , spent fixing up the property. They don't tell you who determined that it is now worth $100,000. They never seem to mention that the property probably rents for less than their debt service, or the money they likely lost because they were not yet educated as property managers and the property was vacant for awhile. They never show you that an improperly screened tenant could very well trash the place and cost the new landlord thousands to evict them and then make repairs.
But ... don't get discouraged by our howevers.
Real estate investing is still the best way for average people to become wealthy. That is the reason we have written hundreds of pages of information, made the necessary forms and landlord tenant law available to you; created help forums and chat rooms; and provide our vacancy listings service.
Learn all you can, operate in a professional and business-like manner, and you are likely to succeed. Don't expect it to be quick and it won't be easy.
About everything they tell you on TV can be done, and probably has been done by someone. Some people even hit the lotto. Get rich quick sales people just don't seem to have time to tell you the down sides, and how to prepare and overcome them. We do, and we add more every day.
By the way, when they parade their successful students past the camera telling you their net worth, remember, that's on paper. P aper net worth is substantially more than could be cash ed out for within a reasonable length of time. Particularly when most assets are in income producing real estate.
Most potential buyers want to steal our property .. with no money down ... like they just saw that guy do on TV.