Carleton Sheets

I first bought Carleton Sheets No Money Down back in 1990. I recently purchased it again in 2000 to review the so-called "Updates" that were added to the course. The reason I bought them was to try to get into some real estate investments as an alternative to the financial markets. I also loaned the course to my brother for his input because he's a former real estate attorney in New York and currently a real estate banker.

Here's what I've learned, found and experienced regarding "no money down" real estate over the last 10+ years ...

Carleton Sheets is a longtime real estate guru who's been on the scene for about 20 years now. He's become a household name for his No Money Down real estate system which is published through a company called The Professional Education Institute. Sounds fancy doesn't it, like it's an accredited, magnanimous organization or something. Actually, it's just a promotional company to sell Carleton's book and tape products. Nothing wrong with that.

Carleton Sheets advertises his No Money Down products and seminars on AM radio as well as through TV infomercials. I always used to hear his ads on ABC radio on my commute home from work. After you buy the No Money Down course, someone representing The Professional Education Institute (PEI) will follow up with you by telemarketing to sell you on a real estate seminar or on a business coaching program. I did not opt for the seminar or coaching since those things would not have helped or changed the realities of real estate investing in my region of the country.

Here's the deal on Carleton Sheets No Money Down :

It's a very slick, well-written and well organized training course. Lots of information. Carleton Sheets is an excellent teacher and a good motivational writer and speaker. But that's where it ends in my opinion.

In reality most of the tired, old "no money down" techniques in the course are highly suspect and in many cases don't work. Some of the techniques may work in certain areas of the country, but not where I live, which is in the beautiful Hudson Valley region of New York state. FYI, we're experiencing a home buyers worst nightmare -- a 10-year sellers' market with NO end in sight. Home prices just keep going up, the bubble keeps getting bigger. I think I may have to wait for it to pop before I sink my money into it.

In my opinion, many of the techniques in No Money Down are not really workable because of supply & demand imbalances. In many housing markets, the buyers outnumber the sellers, which makes it extremely competitive to find good deals. Also, the vast majority of banks and mortgage companies won't allow investors to buy property without some "skin in the game" i.e. a down payment. No money down is considered a cardinal sin in the real estate financing game.

 

Here's a Good, Bad & Ugly report on Carleton Sheets No Money Down.

The GOOD

No Money Down gives a good historical overview of real estate investing (stats, trends, property types, etc.). It's well-written and the salesmanship & motivation portions are instructive. The "Multiple Offer Concept" is a good idea because giving your prospect a choice always helps close the deal. The course has a good glossary and overall is a decent real estate reference.

 

The BAD:

Most people don't have the time, the patience or they don't live in the right areas of the country to play Carleton's "numbers game" for successful real estate investing. Carleton's suggested "numbers game" for his students:

Per week goal -- Call 25 motivated sellers, look at 5 properties, make an offer on 3 of them and hopefully buy 1.

Do you know how much time, energy and work this takes? I hate to break this to the millions of eager real estate students out there, but 95% of them will never achieve these numbers. Most will never come close.

Additionally, much of the U.S. is experiencing ridiculous SELLERS markets that go way beyond strong housing numbers and positive economic outlook. Many areas of the U.S. including mine have experienced SIGNIFICANT SELLERS markets for the last decade fueled by record-low interest rates.

There's a strong financial and emotional attraction to real estate today because of low interest rates and the poor performance of the stock and financial markets. Many small to medium size investors have turned to real estate to put their cash.

Where I live in New York, sellers are getting a premium i.e. more money than their asking price for homes. Bidding wars on property are common. The real estate auctions are heavily attended. Even the people with crappy houses think they can get some sucker to buy their property. More often than not, they're right !

Sellers, even the so-called "down and outers", aren't willing to give much away these days. Why would they when they know some yuppie from New York city will pay them 115% of market value for their home?

Alas, where does that leave me as a potential real estate investor in search of motivated sellers? It leaves me wondering where in the country I have to move to, to find a buyers market.

 

The UGLY:

If you're not careful and have your lawyer fix or approve all your contracts, you could get in a heap of trouble.

Also, because interest rates have been at all time lows for such an extended period, millions of home owners have refinanced or bought property. New housing startups and home sales continue to defy logic and soar in light of our economy. It has a lot of analysts worried that the real estate bubble could pop and when it does, those who are over-leveraged financially will be in big trouble.

For example, those investors that use Carleton's suggested technique of buying real estate at fair market value (FMV) and living with - 0 - or even a small negative cashflow, could be in for a very big surprise. An investor who has over-leveraged himself with properties like this, who has little or no cash, little or no equity and facing declining real estate prices, could be ruined.

Also, so-called assumable loans are very hard to find these days because of changes in government-backed mortgage laws. The pool of NO MONEY Down deals on good residential and commercial properties is only a puddle in reality.

 

CONCLUSIONS:

I am definitely in favor of owning some real estate, particularly your own home. But, Carleton Sheets' No Money Down system seems to be designed for complete newbies who live in buyers markets like in some areas of Florida or the Midwest.

No Money Down was originally developed back in 1985 and most of the "core" elements of the course remained unchanged. A section on buying and renting mobile homes was added and some techniques for prospecting using the Internet. Software for crunching numbers was also added and the audio and videos were updated, but not necessarily with "new info". In my opinion No Money Down does not address any real, workable techniques for hot sellers markets and the realities of today's real estate climate.

With all that said, some people will make money using Carleton Sheets program. I just don't think it's the best choice for the average person. If you live in a buyers market, you may benefit from a few of his strategies.

Rather than messing with "no money down" real estate investing, my advice is to get involved with something more safe, more predictable and more manageable, like Internet marketing.

It is far less risky, a lot more fun and provides substantial income potential at an extremely low cost. You avoid all the hassles associated with trying to buy, sell and rent trashy houses, mobile homes and apartments.