I am in a unique position. I have been studing real estate investing for 3 years and my husband is just now starting to see the potential. My problem is this, I am ready and the only thing that stops me is I am not the one with the money, but I have the drive and knowledge. What sort of ways can I buy real estate without any money to put down or pay points?
I want to get going on this ~
Nightowl
Nightowl, there are several strategies to make money in real estate with little or no money out of your pocket. Wholesaling, subject to's, lease optioning, and seller financing are a couple I can think of off the top of my head that have some strong possibilities. There are also ways to get creative in financing that can get you into a property for little or no money out of your pocket, which I am sure Nothing Down will discuss.
I am personally biased to recommend wholesaling to a new investor with little starting capital. In my opinion it provides the lowest risk for the highest return that I have seen in real estate. It does require a strong ambition level and work ethic, but it can pay very well.
Actually one of my partners in my wholesaling company is married to a very conservative man who is not personally interested in real estate at all. She wanted to get involved with real estate but had to minimize her risk involvement because her husband's well paying government job did credit checks every year. If something went wrong financially, he could and probably would lose his job. She used very little money to start finding properties to wholesale and completely minimized her risks by focusing on assignments of contracts. If she couldn't assign it, she would walk from the deal through a contingency in the contract (she never had to walk, that's one of the reasons why we brought her on board). On a side note when she started her wholesaling business she also had 2 year old triplets and was a stay at home mom. Don't get me wrong she is extremely ambitious and well motivated (I would actually describe her as a tiger/pit bull) but my point is that she started with low capital and worked through an avenue with low risk and still made a very respectable income doing it.
All Cash, you seem to have a very conservative perspective on investing. I started investing with very little to my name, no 401K, no personal mortgage, and WITH credit card debt. I started investing with my tax return because I had no savings. Now I did understand that becoming more financially responsible and living below my means was absolutely necessary to be successful in real estate or in business in general, but I saw real estate investing as my way to break through my income ceiling. In the beginning of my investing career, I had to take some proportionally large risks to start moving forward financially.
I like to play poker occasionally, and I relate it to a good general poker strategy. When you are the short stack (not many chips) at the table, you have to be overly aggressive and take some risks if you are going to grow your chips. Now you calculate those risks. You analyze the other players, you calculate the size of the pot, you factor the chances of making your hand, you factor in 15 different things, but when you gauge your risk tolerance it needs to be HIGHER than normal if you are going to overcome your low funds. Now when you are the big stack (lots of chips) at the table, being more conservative is always a more solid strategy. You factor all the same things but when it comes to your risk tolerance it needs to be LOWER than normal.
Initially in my investing career I had a strong tolerance for risk. I took some big risks, and honestly some of them almost took me down. But instead of destroying my business, by overcoming and working through those extremely challenging and financially risky situations, my business was catapulted to a whole new level in a relatively short amount of time. Now that I have established my business at this level my risk tolerance has dramatically decreased. Not that I don't still take financial risks, but proportionally to the size of my business none of them are going to jeopardize my business' ability to grow and sustain itself.
For some people, real estate investing may be the only chance they have to get ahead. Investing can offer someone the opportunity to make large amounts of money with relatively little experience or education. Now developing increased financial responsibility with what they currently have and with what they will have, will insure that this increased income will not leave just as quickly as it came, but I am just not sure that topping out a 401K or paying off all your debts is the most efficient and effective way for everyone to get ahead. All Cash, I understand that your method is solid and sound, but I am just not sure how practical it is for the majority of newbie investors.
Mine is just another perspective. :D
I appreciate your remarks, All Cash, and the time you put into helping others find the way to the top.
nightowl wrote;
Is this your husband or just some guy who lives under your roof? If he's your husband does he control all the money? What kind of marriage is that?
OTOH, we've been married for 25 years and our rule is; one says no, then it's no. It took me awhile to get my wife on board with REI and I had been doing it for a couple of years before we met. I've passed on some deals because she said no and actually quit acquiring property with fewer than I might have otherwise.
If his answer is still no then you've got more work to do. Either that or the deal aren't that good! About 95% or more of the deals I see newbies proposing on this and other sites are not deals that are worth doing. Unless you've got your 401k or equivalent fully funded and have no debt other than your residence (and even that is chancy) you shouldn't be investing in real estate!
all cash
that's why I'm never going to get married because somthing like 70% of divorces are caused by financial differences. But it sounds like a catch 22 to me because your damned if you do because your partner is not interested, and your damned if you don't because you don't have the money for any down payment nor his support because you can't sign for a mortgage alone now that your married.
Read Robert Allen's "Nothing Down". It will give you some ideas for investing with little cash outlay. Beyond the book, study Short Sales and Wholesaleing. You will need a small budget for advertising, and patience will be a virtue because these types of deals can take more effort to uncover and complete. Hope that helps. I know you said you already have drive and the knowledge, so I hope that wasn't too basic for you.
Good luck!
P.S. I assume that after 3 years you are a member of your local RE investment Club. If not you can join, then go network and get more ideas.
My husband is a great guy but what i need from him to get started in the equity in our present home to buy another to rent out or a rehab. Once I start on a house I won't need any help to buy more.
Thankyou Deb on the book referral. I will get the book and read it.
What about options?
Nightowl
night,
options for what?
if you do not work,what ways can you save money? save money to join your local rei club.
use the local library to gain access to free books and audio/cd (listen to them in your car).
as far as dealing with your husband - just educate yourself. it'd be tough to give you marital advice because of the lack of information. you'd need to give more info. FEAR AND ANXIETY are driving your husbands reluctance to rei. he doesn't know enough and depending on your financial status currently, he may not see the "need" to do what you are considering. (does he make alot of money...over $150,000 annually?)
do you have children?
i would not press my wife to take a HELOC on our home - if i was not TOTALLY versed in the subject. i'm talking a GOOD 6 months to a year of learning about finances (both personal and business), real estate investing - benefits and risks, business operations, and some systems for analysing properties thoroughly.
keep in touch.
Nightowl, there are several strategies to make money in real estate with little or no money out of your pocket. Wholesaling, subject to's, lease optioning, and seller financing are a couple I can think of off the top of my head that have some strong possibilities. There are also ways to get creative in financing that can get you into a property for little or no money out of your pocket, which I am sure Nothing Down will discuss.
I am personally biased to recommend wholesaling to a new investor with little starting capital. In my opinion it provides the lowest risk for the highest return that I have seen in real estate. It does require a strong ambition level and work ethic, but it can pay very well.
Actually one of my partners in my wholesaling company is married to a very conservative man who is not personally interested in real estate at all. She wanted to get involved with real estate but had to minimize her risk involvement because her husband's well paying government job did credit checks every year. If something went wrong financially, he could and probably would lose his job. She used very little money to start finding properties to wholesale and completely minimized her risks by focusing on assignments of contracts. If she couldn't assign it, she would walk from the deal through a contingency in the contract (she never had to walk, that's one of the reasons why we brought her on board). On a side note when she started her wholesaling business she also had 2 year old triplets and was a stay at home mom. Don't get me wrong she is extremely ambitious and well motivated (I would actually describe her as a tiger/pit bull) but my point is that she started with low capital and worked through an avenue with low risk and still made a very respectable income doing it.
All Cash, you seem to have a very conservative perspective on investing. I started investing with very little to my name, no 401K, no personal mortgage, and WITH credit card debt. I started investing with my tax return because I had no savings. Now I did understand that becoming more financially responsible and living below my means was absolutely necessary to be successful in real estate or in business in general, but I saw real estate investing as my way to break through my income ceiling. In the beginning of my investing career, I had to take some proportionally large risks to start moving forward financially.
I like to play poker occasionally, and I relate it to a good general poker strategy. When you are the short stack (not many chips) at the table, you have to be overly aggressive and take some risks if you are going to grow your chips. Now you calculate those risks. You analyze the other players, you calculate the size of the pot, you factor the chances of making your hand, you factor in 15 different things, but when you gauge your risk tolerance it needs to be HIGHER than normal if you are going to overcome your low funds. Now when you are the big stack (lots of chips) at the table, being more conservative is always a more solid strategy. You factor all the same things but when it comes to your risk tolerance it needs to be LOWER than normal.
Initially in my investing career I had a strong tolerance for risk. I took some big risks, and honestly some of them almost took me down. But instead of destroying my business, by overcoming and working through those extremely challenging and financially risky situations, my business was catapulted to a whole new level in a relatively short amount of time. Now that I have established my business at this level my risk tolerance has dramatically decreased. Not that I don't still take financial risks, but proportionally to the size of my business none of them are going to jeopardize my business' ability to grow and sustain itself.
For some people, real estate investing may be the only chance they have to get ahead. Investing can offer someone the opportunity to make large amounts of money with relatively little experience or education. Now developing increased financial responsibility with what they currently have and with what they will have, will insure that this increased income will not leave just as quickly as it came, but I am just not sure that topping out a 401K or paying off all your debts is the most efficient and effective way for everyone to get ahead. All Cash, I understand that your method is solid and sound, but I am just not sure how practical it is for the majority of newbie investors.
Mine is just another perspective. :D
I appreciate your remarks, All Cash, and the time you put into helping others find the way to the top.
ry webb,
that's probably one of the best posts i've read in awhile...better than most of mine... :lol:
so wholesaling...
this goes right along with what i was saying - in as much that in order to start - you MUST build your knowledge up of rei, to even understand which investment strategy(s) are best for YOU.
what works for one person or company may or may NOT work for you and/or your company. DUH. it seems so obvious, but most beginning investors (me included) mistakenly think that rei is a one size fits all...and it is NOT.
but ryan, you put it out there and it makes sense. thanks.