Why “Little Cash and No Credit” Should Be A Motivator

by | BiggerPockets.com

Over the last month I’ve received a number of emails from new investors saying something like this:

“People have been saying that you can get started in real estate with no cash and bad credit, but I just haven’t been able to make any progress and I’m wondering what I’m missing and if this is just a lie from gurus looking to make a buck.”

The issue in some cases is a lack of action or a lack of persistence, however let’s put those two issues aside for a moment and focus on the concern that you can’t get started in real estate without cash or credit.

One thing I know for sure from speaking to investors for the past few years is that the ones who actually started with very little cash and bad (or no) credit are some of the most successful investors.  I believe this is primarily because they had no choice other than to be creative and resourceful.  Once you can make something out of nothing, just imagine how effective you can be!  Don’t let this be a hindrance for you — let it be a motivator!

In one my previous posts, A 7-Day Plan for Aspiring Real Estate Investors, I mentioned that I strongly believe that you at least need a little operating cash to get started even if its for gas in your car or stamps, but a few sacrifices with your discretionary spending in a month can help with that (e.g. reduce your dining out, turn cable off)!

If you’re cash strapped but want to get started quickly, consider some of the following options:

  • Do joint ventures with other active wholesalers in your area — you can make at least $1-2K with each deal and this can help you build capital
  • Drive for dollars, looking for abandoned/vacant properties and finding the owners to see if they are motivated to sell
  • Dial for dollars, calling all the for rent signs in your area and finding motivated landlords who want to sell their properties
  • Look into mobile home investing where all the price tags are smaller than single family homes or commercial buildings

These ideas should at least get your wheels turning.  There’s absolutely no reason why you can’t get started regardless of your financial resources (or lack thereof).  Get educated on the approach you want to take, and just go out there and do it!  There are many experts right here on BiggerPockets who generously share the “how to” and their experiences with various real estate investing strategies.

Would love to hear any other ideas that investors have that might help aspiring investors with little cash get started.

Photo: Jen&Amy

About Author

Shae Bynes is a real estate investor in Sunny South Florida. On her blog, GoodFaithInvesting.com, she provides helpful tips and an inside look at her real estate investing adventures -- obstacles, failures, & successes!


  1. Great topic for discussion, Shae!

    Oh, if it only were that easy. Seriously. I see a lot of this “no cash” and “no credit” talk (aka hype) all the time. The truth is it’s not that easy. And, being in this business requires discipline.

    It starts off with having a strong foundation. I know a lot of folks think personal finance is too simple but the truth is most folks don’t have their finances in order. And, not having finances in order and overspending is a recipe for disaster especially when folks mix investing activities with those goals.

    My personal opinion is that folks should not be investing if they do not have their personal finances in order. This boils down to habits, where is all the money going? If more money is going out then coming in, there’s a problem. What’s worse is if there’s not even enough money to pay yourself 1st the general rule of thumb of at least 10% (aka money for investing), there’s an even bigger problem. (Just like the Cash Flow game!)

    I know people don’t want to hear this, but it’s the truth – having personal finances in order is key. A lot of folks go into this business thinking its like the lottery. If they could just make “x” amount of money without doing any work and hit the jackpot, they’d be set for life. Honestly, chances are it’s not going to happen. Sure, there are those who got lucky when the market was good. But, that is short term. What happens afterwards? Most likely, the money will disappear.

    Every time people ask, “How can I make things work? What’s the secret?” I say, “For me, I play it just like the Cash Flow game.” Yet, they are still baffled. It’s not rocket science, it’s just having the will and the discipline to make the sacrifices needed to achieve the overall goal(s). In theory, it sounds good. Though, in practice it’s a different story.

    You’re right about having some operating cash to start. It takes money to start any business – real estate is no different. The key is having the discipline to make a plan and stick with it. What are their goals? (i.e. short term, long term, etc). Do folks need to build up cash? Or, are they ready to buy and hold? If they are ready to buy and hold, do they have the cash reserves to weather out the storm if things turn sour? These are all important questions to ask.

    A very successful businessman once told me, “The secret to being rich is to minimize your expenses. The trick is to have more money coming in than going out. If you can master that, you will never have to worry about money again.”

    Looking forward to hearing what others have to say, good subject for discussion!

    • Your response is a great blog post by itself, Rachel! I agree that getting finances in order is very important and that at getting some basics in place (a budget, controlling spending, paying yourself first, etc) is certainly ideal. If you make some money in your real estate activities and there’s no discipline, the money will leave your hands again pretty quickly! The point I was mostly trying to make is that people shouldn’t have this as a hindrance to take action because I can think of several people who started out with nothing and made something significant out of it (and kept their money….they didn’t lose it). But to your point, what I was missing is an important ingredient which is having the fundamentals because there are also people who started out with nothing, made something significant, and then were back to nothing again because of a lack of financial discipline. Thanks for adding to the discussion!

  2. The brutal reality is that you can’t spend everything you make and expect to get rich. Period. If you are slipping further and further into debt each month and you think real estate investing is going to save you, I have bad news for you. It won’t.

    This is not to be confused with the fact that you CAN’T start investing in real estate with no money … you CAN as Shae points out. And many people have used this situation to propel them to success.

    But you’re making everything along the way so much more difficult for yourself if don’t have control of your finances. If you’re not loving your money then what kind of comfort can you offer a private lender or joint venture partner that you’re going to take good care of THEIR money.

    Good post Shae and as always the award for most valuable blog commentor goes to Rachel.

  3. Peter Giardini on

    Shae, great post… as always!

    In addition to the great responses from Rachel and Julie… I would like to reinforce your point regarding the following statement… “the ones who actually started with very little cash and bad (or no) credit are some of the most successful investors”

    I have found this to be an almost universal reality. Every active, but struggling investor, who has sought my insight and guidance always seemed to have cash available to cover cost overruns, outbid someone by a couple of thousand, accept a lower rent, etc… and in every case they can’t figure out why real estate isn’t working for them.

    The answer is simple… to much available cash without the discipline to manage it causes almost everyone to do stupid things… whether it is arrogance, ignorance or just being stupid I have seen it too many times to believe it is a mere coincidence.

    Keep these great insights coming.

    • Pete, thanks so much for your added insights here. I will admit that I’ve been caught in the too much available cash situation before when dealing with a rehab. I can think of 2 or 3 decisions we made that were compromising because of the comfort that “we had the cash.” Bad idea. We won’t make those same kinds of mistakes again!

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