Buying houses with little or no money and no credit is not a myth. In fact, the process of using creative financing is exclusive to real estate investing and offers the buyer the maximum leverage possible – zero investment. So technically any profit the investor makes selling or renting the house is an infinite return on his capital ($0)! If there is a myth about using no money to buy a house, it is the myth that an investor must give the seller a monetary consideration to “seal the deal”. This is a myth because all contracts read “for the sum of $___ dollars or other good and valuable consideration…” and in this case, the valuable consideration is always the purchase of the property. Hence, no good faith money is needed to put the house under contract. An escrow deposit or “earnest money” deposit may be required depending on the seller and the offer the buyer makes.

It sounds good so lets look at the most common ways to make it happen:

The seller signs a Purchase and Sale Agreement with the stipulation that an escrow deposit will not be made until after the inspection period elapses. If the investor makes a good case for the reason, he may be able to get a 60 day inspection. This may sound outrageous, but it is common practice in our business. It works because we ask for it and compromise to 30 – 45 days instead of the usual 10 or 15 days that most investors get. This extended period gives the investor adequate time to find a buyer either wholesale or retail.

The investor can use seller financing in a couple of forms:

1.The most popular is “Subject To” financing where the seller allows an existing mortgage(s) to stay in place and the investor immediately starts making the monthly payments usually when the homeowner has vacated the property.

2.The homeowner allows a “Subject To” financing with his first mortgage and the buyer gives the seller a second mortgage for his equity for most of or the rest of the purchase price. This is appropriately called “Owner Financing” and can even be more than the purchase price if the seller agrees to help finance the funds needed for the investor’s rehab of the property.

3.The seller can lease option the house to the buyer who has a pre-determined time to re-lease option the property to an end buyer. The investor collects a larger “option consideration” that the seller gets, and he charges a markup of the lease payments to have yet another profit center. Lease options have come under regulatory scrutiny for investor abuse so get professional legal assistance before you try one. The industry secret to a lease option with a buyer is to do a “double contract” which is a lease and an option separately, but do a single contract with the seller. The single contract accrues equity with each payment while the double contract is a true lease and the buyer can be easily evicted versus a foreclosure in the case of a single document.

4.An option contract is just what it sounds like “an option with a pre-agreed upon “strike price” or purchase price for a set period of time. The usual “financial consideration” to get an option from a seller is $100 or whatever can be negotiated. The beauty of the option contract is the investor doesn’t have to have any carrying or overhead cost for the house.

5.An Equity Agreement is a contract between the seller and the investor that stipulates how the house is to be rehabbed and sold and the proceeds to be split among the seller and the investor. If you do one of these it is critical to have everything in very detailed writing so there is no misunderstanding between both parties.

In summary, the most popular of this partial list of purchase methods for little or no money and no credit is the “put it under contract for the longest possible time” and sell it wholesale. The really large profits come when the investor can work at getting at or near retail when he sells. The limiting factor for the investor is an accurate determination of all costs, expenses, and a salable market price so the house can be priced attractively enough to sell very quickly.

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The American Dream of home ownership usually demands some rather peculiar legal considerations for GLBT couples, since the law doesn’t treat GLBT couples with the same respect and consideration reserved for those who can waltz into any 24-hour chapel of love in Las Vegas and get legally married.

But Sin City recently passed a new ordinance that may curtail the hours for all-night marriage chapels, so who knows what might happen next? Maybe one of these years legislation will also end the 24-hour ban on GLBT marriages.

In the meantime, those GLBT couples thinking of buying real estate together may want to make some unique preparations in terms of information gathering and fact-finding, to learn as much about the process – and what to expect in the future – as possible.

Here are three things to ponder before taking the plunge into your share of the American Dream of home ownership:

1) Sharing payments:

If you are both planning to contribute equally to the transaction, there is more to consider than just the purchase price and monthly mortgage payments. You will need to divide the down payment, which can be up to 20 percent of the purchase price, and closing costs, which will likely be a few thousand dollars. And there are other incidental expenses such as mortgage insurance, homeowner’s insurance, and property taxes.

If you decide to pay unequal portions – for example, if one partner pays 60 percent and the other 40 percent – then you will want to have your attorney specify the ratio of ownership in the deed. Otherwise, most states will assume that you each own half. Dividing the property if you ever sell it or go your separate ways is much easier if you have proper legal documentation of your shared ownership interests.

In most states, a contract can be drafted that spells out the agreement between partners so that there is no confusion and other legal obstacles are easily overcome. The contract can be recorded at the courthouse, but if you prefer for it to remain private, that is also an option.

2) Applying for the mortgage:

When two people apply for a mortgage, the lender will check such things as credit history, income, and assets for both parties. If one of you has stellar credit but the other has had a recent bankruptcy, for instance, it could create problems with the loan. On the other hand, if both of you have great credit and substantial income, combining your track records may get you a lower interest rate or other perks.

So before you apply for the mortgage, get a good picture of your credit worthiness and other relevant financial information, so that you know your potential strengths and weaknesses in terms of borrowing power. While you’re at it you can gather all the various documents that a lender will request, such as income tax statements and pay stubs, so that when you are ready to apply for a loan the process will go smoothly and quickly.

3) Survivorship rights:

Perhaps the most significant property rights issue for gay and lesbian couples versus married couples in the USA has to do with survivorship rights. If two people own the same piece of real estate but are not legally married, the courts generally define the ownership as shared, but not subject to rights of survivorship. “Right of survivorship” means that when one of the people who shares ownership dies, legal ownership of the entire property passes automatically to the surviving partner. So gay and lesbian couples need to take steps on their own if they want to ensure that if one partner dies, the other partner will be able to keep the house and automatically inherit full ownership.

And although a Last Will and Testament can take a long time to execute, the document that is most commonly used by gay couples to ensure survivorship happens automatically, because it is not actually a will but is a special kind of property deed. If the deeds states that there is “Joint Tenancy with the Right of Survivorship”, the transfer of ownership will likely not have to go through probate court like a Last Will and Testament. Joint Tenancy with survivorship rights is not legal everywhere, but many states still honor it and it is a good option for GLBT couples.

Before shopping for a home, it is a good idea to seek out expert legal and financial advice. If you visit a bank or mortgage company, you can get plenty of information regarding loan options and mortgage application criteria. And by enlisting the help of an attorney who specializes in real estate law – and also has experience with the kinds of legal issues that are particularly important to gay and lesbian couples – you can take steps to ensure the protection of your real estate assets. Planning ahead will also give you and your partner extra peace of mind.

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