When you see the advertisements for no money down opportunities, the first instinct may be to grab a pen and ask where to sign up. But before you sign anything related to no money down investments or loans, you need to know the details – all the details.

No money down investments come in many forms, including real estate. The problem with no money down investment opportunities is that companies are in business to make a profit. If they aren’t making a profit from your down payment, they’re most likely going to be making it up somewhere. That means that you have to figure out where they’re planning to make it up, then decide whether the no money down opportunity is worth the eventual cost.

Does that mean that no money down investments and loans are never a good deal? Actually, there are lots of opportunities out there that require no money down, and many of them are good deals. Here are a few steps toward weeding out the scams from the good deals.

If there’s a no money down loan or investment you’re considering, take a look at what is expected of you to get in on the deal. Are they running credit checks? Are you providing anything at all? If this is a “no conditions” deal, be very wary. A business is going to be protecting its assets. That’s the purpose of a down payment. A person who has put money down has a vested interest in the property and is less likely to default and more likely to follow through with the terms of the agreement. If the company isn’t even requiring that you meet any terms or conditions for the no money down opportunity, that means that anyone – literally – could get in on the deal. Your credit rating may be enough to get you into a deal with no money down. But there aren’t any legitimate deals out there that don’t require cash down, or at least proof of ability (and willingness) to meet the terms of the agreement.

You should also take time to read all the terms of the contract you’re about to sign to enter into the no money down investment. Know what you’re agreeing to both on the initial signing and throughout the term of the contract. Balloon payments, increased interest rates and extra payments to be made in addition to regular payments are among the ways companies recoup the “generosity” of the no money down loan.

No money down investment are often nothing more than scams. Before you offer up any personal information, be sure that the company is legitimate and that you understand the terms. If the company is reluctant to answer your questions about the no money down opportunity, take that as a warning sign. Another red flag is when someone claiming to have the “no money down opportunity of a lifetime” contacts you.

There are legitimate no money down investments, including real estate opportunities and loans, available. Being more careful in these situations is simply common sense.