I started property investing 5 years ago I did the old
fashioned way, released money from my home, bought a
couple of terraced properties, waited for them to increase
in value and then remortgage. Then around 2 ½
years ago I stumbled on No Money Down or NMD. I thought
all my Christmas’s had come at once. I couldn’t
believe that you could buy property this way. There
had to be a catch! But there wasn’t, I just kept
buying and before you knew it id bought 35 houses within
the unthinkable happened, the credit crunch and the
demise of Mortgage Express, I was devastated. What I
thought was my God given right to buy properties in
this way, was snatched away from me, just as I was planning
my early retirement (I was only 29 at the time)
a saying up North, “Owt for Nowt” and not
a truer word can be said of NMD. Its only human nature
that if we can gain a lot, by not putting much in, we’ll
and my family have done pretty well from NMD so I have
to support the idea. Although most of my NMD were done
through Mortgage Express and not through creative financing
that may or not be ethical.
me NMD has caused a lot of problems for investors. I
feel that it has brainwashed investors into thinking
this is the only way to purchase investment property
and that putting partial or full deposits into a deal
is a sin. However for new investors, this is all they
concern is that investors are missing out on great deals
because of the mentality that is forced upon us by the
recently had an investor turn down a deal that produced
£305 positive cash flow per month because he had
to put 5k into the deal (including ALL fees).
was a wealthy investor and cash rich, he was just of
the opinion that if NMD exist then he’s not going
to buy properties any other way.
3 or 4 years ago before NMD if you were offered a 14.7%
yielding property at 15 – 20 % Below Market Value,
you would have snapped their hand off and paid the full
deposit. Now investors have the mindset that if in order
to purchase property all they are prepared to spend
is a few hundred pounds or even want cash back.
get me wrong, if you haven’t got the money you
simply haven’t got it, and NMD is the only option
you have to purchase properties. However if you haven’t
got any cash, should you really be in property investing?
happens if major repairs are needed or if the tenant
decides not to pay? How will you cash flow the situation
if you have no savings, you can’t just say “ill
cross that bridge when I come to it” that’s
not responsible investing
Is it Ethical?
really is a grey area and I can’t reach a definitive
conclusion on this topic in only a few short paragraphs,
but I’ll certainly try my best.
is defined as “being in accordance with the accepted
principles of right and wrong that govern the conduct
of a profession”
your solicitor or conveyancer might agree with what
your doing, your accountant say its ok and you obviously
think its fine, but does your mortgages company? Of
course not, hence having to use designated solicitors
and all this cloak and dagger stuff. Has any one been
totally upfront and honest with the mortgage companies
and still been allowed to buy properties in this way?
I doubt it. Therefore how can we claim we are being
completely ethical if we’re not being honest?
before you all start calling me Judas or traitor, I
must re-iterate I’m a fan of NMD and as long as
it’s legal, I’ll continue to purchase properties
in this way. I’m just open minded and not blinded
by the media.
am of the opinion that NMD was good while it lasted
and has certainly served it’s purpose over the
last few years, but like all good things it must come
to an end. Over the next few years we will see a clamp
down, in various forms on the NMD and the return to
deposit purchasing. We just need to be more open to
the concept that our cash might not go as far as it
secret of success in life is for a man to be ready for
his opportunity when it comes.”