The death of no money down property

Brett Alegre-Wood
January 7, 2012

Deals that destroy markets

Let me say firstly if you're a property lender or property valuer reading this, YPC Group DO NOT offer no money down deals…

In fact if you read further you'll see that we are actually against it – totally. It's one of the reasons that the property investment industry has been decimated in recent years.

I have become very critical of the no money down and cashback model as I've seen it destroy two property markets in Australia and the UK, and take countless thousands of investors with it.

As a principle, no money down was something that I grew up on in Australia. It was something I learnt how to do and when I started, it was possible to find a good value property that you were able to structure in a no money down way, and it was also legal to do it.

In Australia I saw the problems it caused people and it is one of the reasons we have run away from anything that is no money down. The UK went down the same track as Australia. The property that couldn't be sold through normal agents was passed down the food chain until it ended up at the arse-end of the industry, the NMD end. In other words – we cannot sell this anywhere else so let's put a structure in place where some fool buys it because of the ‘made up' numbers rather than the investment property fundamentals.

The problem was that as the industry became more and more in the open it began to get abused. Easy salesmanship replaced good solid fundamentals, the property wasn't as important because you weren't paying anything to buy it (or so you thought).

In Australia it was stamped out over time in much the same fashion as it has in the UK. Yet in both countries it was only stopped after stealing many peoples dreams and placing them in financial situations you just wouldn't wish on anyone.

All the hype and BS that surrounded the selling of NMD was venomous, destroying lives and tainting what I believe is the best and most productive industry in the world. Property truly is the only way now that Mr and Mrs Joe Average can safely build wealth at the same time as Mr Fancy Car and Mrs Diamonds and Pearls but also afford such an extravagant lifestyle.

In truth, NMD is dead. Speak to any reputable solicitor, any lender, any bank. Just go ahead and ask them if there is anyway you can buy without putting any of your own risk capital into an investment. They will probably have you escorted out of the building.

Yet property companies will tell you the mischievous ways of structuring it – the structures, the loopholes that they have found but the truth is it requires someone to NOT do their job properly or blatantly commit fraud… In this case mortgage fraud and that person is often you, as you had full knowledge of the fraud.

Now many people are happy to take the risks and they get away with it but these are normally the same people who believe in overnight success and becoming millionaires in two years, or zero to 100 properties in 3 years… Sure it happens but very rarely.

Even if they structure the deal in such a way that it's the solicitor doing the fraud with you. Are these really the type of ethical, professional people you want to be working with? I would suggest not. Their loyalties lie in the money they can make from what amounts to criminal activity.

Another thing, if they are prepared to miss the obvious things then what else have they missed.

Also you have to ask if these people are committing fraud – how long are they likely to be around before they go out of business? Are they a property investment company gone bad? And again are they really looking after your best interests or the money they can make. The latter I bet.

So if you're looking at the NMD options that are out there….Hmm… hopefully we will put that myth to bed. If we would like to know more about quality property sourced, negotiated, bought, and managed the way it is meant to be then give us a call on     +44 (0)207 923 6100 or directly the teams mobiles.

Live with passion,
Brett Alegre-Wood


UK Property Investment, UK Property Investment

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