| Most people would assume they were locked out of the housing market. Their friends and associates would have agreed with them. Case closed. Yet I was undeterred, figuring that where there's a will there's a way. I visited a local bookstore, and my eyes fell on a business book with the generic title: How to Buy Real Estate With No Money Down. I bought it immediately, of course. But when I showed it to my friends, they laughed. "Everybody dreams of buying a house with no money down," one said. "But it's not possible. You're going to have to put up a substantial down payment to satisfy the bank, cover the real estate commission, and pay closing costs. So how the heck are you going to buy a house with no money down?" His skepticism sounded reasonable. But I read the book anyway. And my eyes were opened. The author freely admitted that most houses could never be bought with no money down for the very reasons my friend enumerated. Instead, the writer advised that I look for a home with three special circumstances. The first? The seller had to be what he called a "don't-wanter." In other words, he had to be strongly motivated to sell the house quickly. Maybe it had already been on the market a long time and the upkeep had become a pain in the neck. Maybe he had already bought another house elsewhere and couldn't afford to make two mortgage payments. There are endless potential circumstances that can create a don't-wanter. I happened upon mine in the real estate listings of The Orlando Sentinel. I found a merchant marine with a brand spanking new three-bedroom townhouse that he had bought pre-construction and planned to occupy. Then he got the order to move overseas. Because mortgage rates were in the high teens - destroying the residential real estate market - he had been unable to unload it. That - and his travel plans - made him a don't-wanter. The second set of circumstances I needed was for the property to be "For Sale by Owner." The reason is simple. Without a realtor involved, there is no real estate commission to cover. Thirdly, the seller had to be willing to carry the financing. In other words, rather than me going to the bank and taking out a mortgage to cash him out, he had to be willing to let me make the payments directly to him. (Which he would then pass them along to the mortgagor.) Why would both sides agree to such an arrangement? As noted, he really wanted out. If carrying the financing were necessary, he was willing to do it. I, on the other hand, wanted in. I especially wanted to take over his older, lower-interest-rate mortgage, since I could neither afford nor qualify for a new mortgage. However, the seller wasn't so desperate that he was willing to simply let me take over the payments. (Although I've since met folks who have bought homes that way in a really bad market.) He wanted $3,000 down as security. Unfortunately, that was about $3,000 more than I had on hand. But I got a $3,000 advance on my MasterCard - and gave it to him after I paid a lawyer a few hundred dollars to draw up what is known as a contract for deed, or land contract. The contract stipulated that if I continued to make the mortgage payments in a timely fashion, the property was mine. But if I fell even 60 days behind, he could take the property back and keep the accumulated equity. Our rights and responsibilities were clearly delineated. And both sides were happy, as is the case with every free-market transaction. I was delighted, a young, single guy with a brand new three-bedroom place. I took the master bedroom and then invited a couple of buddies to move in. Their rent covered most of the mortgage payment. They also paid two-thirds of the utilities. And I got all the tax breaks, writing off the mortgage interest and property taxes each year. It was my first taste of capitalism. And I liked it. I was building equity while paying less each month than when I was a renter. I sold the place for a tidy profit five years later and avoided a capital gains tax by buying a larger lakefront home... also with no money down. Why am I sharing this story? Because most people in my situation would have said they couldn't afford to buy a house. End of story. Yet all it took was a strong desire, a bit of creative thinking, and some pluck. Can you buy your dream house this way? Perhaps. (That was my modest dream house at the time.) Then again, perhaps not. But you can almost certainly find some home in your area this way. A contract for deed is a great vehicle for getting a seller out of a house that he no longer wants. And it allows the buyer to take over his old lower-interest mortgage in the process. (Moreover, the seller could potentially use a contract for deed to buy his next place, whether he is upsizing, downsizing, or just relocating.) A contract for deed is just one of several ways to buy a house with no money down. Yet, like achieving the American Dream itself, it all starts with believing in the possibility. Good investing, Alex | 
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