James’ Grade for Carleton Sheets: D +

by Dual Income No Kids on June 1, 2006 · 0 comments

Carleton Sheets is the famous ‘No Money Down” guru. He’s a big proponent of using no-money down techniques to purchase real estate. Basically, Carlton advocates finding motivated sellers, using highly leveraged purchasing strategies, and creative techniques like getting cash back at closing and flipping to acquire real estate. To share these strategies, he sells a series of books on CD. They retail for about $9.95 on his website.

I have serious concerns about Sheet’s methods, so I’m happily awarding him a grade of D +.

This might seem like a harsh grade, but if you’re a frequent reader of our blog, you’ll see that I can back up my ratings.

1) Sheets’ approach tries to get something for nothing. Basically, Sheets says you should purchase real estate for no money down and rent it out. The problem with highly leveraged properties is that one must pay interest on the leveraged money. There usually isn’t any way around it. Every dollar you owe interest on puts pressure on your rental profit margins. The more you borrow, the less your profit.

In other words, there is no such thing as a free lunch. What is more realistic is savings up an adequate downpayment or investing wisely and using the proceeds to fund your real estate purchase. Trying to get something for nothing is just silly.

2) Sheets’ business is selling advice, not investing in real estate. Most of the traffic on the internet I’ve read suggests that he doesn’t actually do a lot of real estate investing. Instead, his webpage seems more focused on selling his books on tape. This would be okay, but Sheets styles himself as a real estate expert. The impression this gives is misleading. If he is a promoter, he should be up front about it.

In all fairness, I would have given Sheets an F. However, I had a really first rate real estate agent who swears by his stuff, so I adjusted my grade accordingly.

Happy Investing!

-James

p.s. If you want a more thorough criticism of Sheets, here it is.

p.s.s Click here for some Sheets fun.

p.s.s. My agents name was Brian York. If you want someone who is experienced in handling multifamily properties in the DC area, I highly recommend you check out his site: Federal City Realty.

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