As a brief reminder, I am principally a buy, refurbish and hold/refinance investor, buying comparatively cheap suburban stock in secondary locations throughout the UK, and I have bought over 200 units in the past eight years - with the majority of those purchases, as you might expect, concentrated in the last four years.

For those who missed last month’s article, I focused on the first of my four pillars of property investment - the supply of deals. It seems fair to say that without a deal of some kind - even if that deal sees you pay market price, or even above market price, it is impossible to get out of the starting blocks.

Strangely enough, one cannot necessarily conclude the same about money in general when it comes to property. The road to financial freedom is littered with the skulls of those who have attempted to do it with no money, and claims of no-money-down investment usually range from the extremely hopeful to the out-and-out misleading. Very often this is from those whose agenda is to sell you their “secret sauce”, and have no qualms at all about encouraging people to borrow the money on a credit card (or similar) for their mentoring/event, their training course, etc.

So why can’t the conclusion be the same for money as it is for deals? Because it certainly is possible to do deals without using any of your own money. However, I would encourage anyone who is quite early on in a property or general investment career to proceed with caution in this arena, for two primary reasons: 1) In my experience, the more money, assets, track record and credibility that you have, the easier it is to do deals with none of your own money. This should be named “the NMD (no-money-down) paradox” or similar! 2) No money down in many situations can mean 100% leverage (not necessarily as we will explore).

The more % leverage you take, the more risk you take - and the more you get it right, the better you will do - but likewise, the more you don’t get it right or get it wrong, the worse you will do! 100% mortgages were a big part of the 2008 financial crisis, and one of the primary reasons why they were such a problem is because many people took their eye off of investing fundamentals, and stopped asking themselves basic questions such as “is this property good value?” Instead they starting thinking along the lines of “oh well, as I can borrow all of the money, I might as well do it”. If that’s how you think about 100% leverage or other people’s money, it is not too strong in my opinion to say that, with 100% certainty, you will go broke. If no-money-down fosters a bad mindset, it will be punishing at some point along the way.