I sometimes see posts on forums and Facebook groups suggesting that No Money Down is illegal.
When I see blanket statements like that I understand that they don’t fully understand what No Money Down (NMD) means.
A simple analogy would be something like, if you saw a car that had worn brakes and had failed it’s MOT and had no insurance, and it was being driven through a 30 mph limit at 100 mph, it would be illegal – but to then suggest that ALL cars are therefore illegal is absurd.
In the same way, it’s true that some NMD techniques are illegal.
Reading further on the forums or Facebook groups the author of the comments usually (often) suggests it’s illegal because it involves mortgage fraud.
It is true that if the NMD technique involves mortgage fraud then clearly it is illegal.
However, there are many ways to do NMD which DON’T involve mortgage fraud.
And so there are many ways of doing NMD which ARE legal.
One of the best (but by no means the only way) is through the use of option agreements.
Using options on residential property is relatively new in the UK, but is not new in commerce generally.
Silk traders used options in ancient times, wool traders used options in medieval times, and the use of options is well known and accepted on The Stock Exchange.
The main advantages of an option agreement are:
you can agree a price today
for a purchase in the future
but not be committed to buying if circumstances change your mind
BUT the seller is committed to sell to you whatever
So you can have control of a property which gives the same benefits of ownership, but WITHOUT having to buy and raise finance.
Anyway, I explain it all in the video, so grab a cuppa and have a look.
Here’s to successful property investing.
Peter Jones
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
thepropertyteacher.co.uk
PS. By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same.
For more details please go to:
thepropertyteacher.co.uk/the-successful-property-investors-strategy-workshop
