No Money Down Investment Schemes – 20 Sep 2013

Posted on September 19th, 2013 in Caution Ahead



Are “No Money Down” property investment schemes for real?  Too good to be true?

“No money down” schemes can be bogus below-market-value deals or in the worse case, scams.  There are several variations and below are common scenarios how they are played out:

= Scenario 1 =

1) The property investor club claims it has found a “good” property at below market value and ask you, the investor to buy it as the deal structure is also a “no money down” scheme.

2) You are then invited to place a down-payment to buy the property and take up a mortgage via the club’s own lawyers and middle-man.

3) The property is mortgaged or re-mortgaged at a higher value than your buying price with the cash difference going back to you. Hence you get back your down-payment, full or partial, meaning “no money down”.

4) The “misled” lender who granted you the mortgage based on a higher valuation is not told about your lower buying price, meaning you have purchased the property with a “fraudulent” mortgage application.

= Scenario 2 =

1)  You could be simply paying ABOVE the true valuation and selling price, getting the illusion of “no money down,” since the excess you have paid is refunded to you while the outstanding is funded by a mortgage.


At Empower Advisory, we have the public interest in mind and are educators at heart. No Scams. No Nonsense.

Our Best, Always

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