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Updated about 11 years ago,
Zero Down Properties and Investing
I've been buying and selling residential and commercial properties in the Pacific Northwest (Seattle, Spokane, Idaho) for 10 years now and I've been financing investors over the last 5 years. I thought I would weigh in on "Zero Down Investing" and voice my thought and opinion.
I am NOT an advocate for Zero Down purchasing and this is why. I will try to include why I don't like it as an investor, lender, and why I don't think it's appropriate.
Nothing Down = Nothing to Lose.
If you don't have any money to put down on the investment then generally speaking you don't have any skin in the game. When you don't have any skin in the game, then you don't have much to lose, when you don't have as much to lose then it's easy to QUIT.
Jumping the Gun
Zero Down potentially shows that you are "jumping the gun" and you haven't taken the time to save up and research your purchase. When someone has saved money over a period of time for their down payment it shows self discipline and gives them time to really consider what they want and how they are going to afford it.
Zero Down Deals might not be as good
If a home owner or an investor is willing to sell you there property Zero Down then they might not be selling you a deal that's as good as you should be buying. Generally when people are looking for alternatives to the market norms then they are selling deal that aren't sellable.
Zero Down Lenders aren't as good.
If a lender is offering a Zero Down Payment option then they may be offering terms that really aren't as competitive and they may even have some other motive. Most of the time what we have seen it that these lenders are charging a lot more to offer a Zero Down service, which is never in the borrowers best interest.
There are ton's of great alternatives to Nothing Down and Zero Down. I'll be posting on that over the next few weeks.