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From: klein@ucbcad.UUCP (Mike Klein)
Newsgroups: net.invest
Subject: Re: NOTHING DOWN SEMINAR (ROBT. G. ALLEN)
Message-ID: <18@ucbcad.UUCP>
Date: Wed, 5-Jun-85 12:50:55 EDT
Article-I.D.: ucbcad.18
Posted: Wed Jun  5 12:50:55 1985
Date-Received: Sun, 9-Jun-85 04:07:52 EDT
References: <2479@decwrl.UUCP>
Organization: UC Berkeley CAD Group, Berkeley, CA
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The Wall Street Journal carried a major article just a few days ago on
this subject; I will guess that it was either Friday 5/31 or Monday 6/3.
It was one of their front-page-of-part-two articles.  Their assessment
of these deals is overall quite negative in the current real estate market.
You should definitely find the issue and read it to get the details.

In general, nothing-down deals are riskier than something-down deals
(why would the seller be willing to give you something for nothing down?).
In previous years, some people made a lot of money on these because
appreciation of real estate was considerable and virtually certain.
This is certainly not the case any more.  Many of these deals require
more cash during the term of the investment than conventional deals,
and if your income from the investment or your appreciation is not
sufficient, you lose.  The Journal interviewed several people who had
gone to these ``Nothing-Down'' seminars; essentially no attendees had
been able to buy under these terms.  The few that had were in large
part stuck because they in turn could not re-sell the property, ran into
large negative cash flow problems, or had other comparable problems.
Most would not do it again.  There were, of course, a few exceptions.

The article's conclusion was that you must realize that the real estate market
today is different than when most of these people like Robert Allen
made their money (that's why they are giving seminars now), and that
if you can afford at least a small down payment, you will find
investments that entail far less risk.
-- 

		-Mike Klein
		...!ucbvax!ucbmerlin:klein	(UUCP)
		klein%ucbmerlin@berkeley	(ARPA)